Giving children pocket money is an important way to teach children about money and how to manage it. Furthermore, it helps children develop independence and attitudes towards both saving and spending money.
When to introduce pocket money and how much to give:
- While there is no right or wrong time to start giving your child pocket money, most Australian children are usually given pocket money from the age of six.
- Research has also determined that on average, children between six and ten receive an ‘income’ of $20-25 per month.
- It is important for parents to consider an amount that they themselves are comfortable with. Factors to consider when choosing this amount should be based upon the family’s financial situation, and the child’s spending needs.
Important concepts for parents to teach children:
- the value of money: the relative price of things
- spending: accepting that money is gone once it’s spent
- earning: understanding that earning money can be hard work, but usually that’s the only way to get it
- saving: using short-term and long-term goals
- borrowing: understanding the importance of repaying borrowed money.
Tips for Parents:
- Let your children make mistakes when it comes to saving and spending their money.
- You may want to restrict your child from spending their money inappropriately, for example, on excessive amounts of junk food, or on dangerous toys/items.
- Children often mimic the spending and saving habits of their parents. Parents can teach their children such habits by modelling appropriate spending and saving techniques, and by discussing their methods with their child.
- It is also recommended that parents pay their children on a set day in order to develop a routine. This means trying to avoid giving your child advanced payments or supplementing their usual budget with additional funds.
- Some parents choose to link daily chores or additional chores with pocket money, while others view family contributions and pocket money as separate issues. There is no set rule when it comes to handling this, so each family must determine what is best for them.
*Information for this article was gathered from the Raising Children Network and Kids Money and Kimberley O’Brien.