The great pocket money debate!
How much pocket money should you give your children? It’s important to get it right as the amount you give can be a great way to teach your kids the value of money, saving and spending, while gradually learning responsibility and financial independence. Here is our guide to the best way to ‘strike a deal’ with your children.
- How much pocket money should you pay?
- Pocket money and the recession
- Household chores
- Teenagers and pocket money
- Supplementing pocket money
- Saving pocket money
There is no right or wrong answer to this. How much you are prepared to give depends entirely on what you believe is fair, what you want your child to get out of it, and how much you can afford. According to Halifax’s 2009 statistics children received an average of £6.24 per week, a slight rise on the 2008 amount of £6.13. Children in London also fared much better than other areas, with averages above £10, while children in the South West and East Anglia received £4.50 and £4.91 respectively. Research also showed that a child`s age played a big part in how much parents were willing to give, with 8 to 11 year-olds getting an average of £4.80 per week whilst 12 to 15 year-olds received a whopping £7.44. When it comes to deciding on pocket money for your child, start by considering what you think is appropriate for their age. Using the above figures as a guide, a couple of pounds a week would be quite reasonable if your child is under eight years old. If you share custody of your child, speak with the other parent to come up with a figure you both think is fair – you might choose to each pay half of the amount. Also, think about what else you give your child. If you are happy to buy the majority of things they want or need, you might not want to give them too much pocket money as well. It could also be handy to have a chat with other parents, particularly those of your child’s friends, about how much they give their children. But whatever you do, don’t get sucked into competing with them! Research from Child Trust Fund provider The Children`s Mutual has shown that 16% of parents feel like they are paying too much pocket money, but are pressured into keeping up with what other parents are giving. Only you can know what best suits your child (and your pocket!), so never worry about “keeping up with the Joneses.” Once you’ve decided an appropriate amount, sit down with your child and discuss it with them. You might like to make an agreement that they will get a ‘pay rise’ each birthday, or ‘bonuses’ for good work at home or school – this will give them something to look forward to, as well as some incentive to behave! Other tips to observe include:
- Be consistent – if you are going to withhold pocket money for any reason, you will have to do it all the time. Likewise, don’t just cave in if you’re child pesters you for extra money or to buy them something else, or they will never learn
- Be clear about whether or not your child can spend their money on whatever they want, or if they have to run it by you first.
- Make them pay for certain treats out of their own money. This way they will start to see where their money goes, and that it goes quickly!
- You may like to give them extra cash every now and then so they can buy presents for friends or family members, or encourage them to use some of their savings to buy or make something small as gifts (remember, it is the thought that counts…)
- Try not to double up on how money is spent. For example, if you buy sweets and treats anyway, encourage your kids to spend their money on something else.
Pocket money and the recession
Baring in mind the sorry state of the economy last year you may have been a bit miffed to discover that the average amount of weekly pocket money went up. Children shouldn’t be feeling too smug though as the 2009 average of £6.24 is still well below the 2005 average of £8.37. If the recession has hit you hard then its natural that you’ll be looking at ways of cutting back. If you need to lower the amount of pocket money you’re giving don’t feel bad. Just explain to your child that times are tough at the moment and that everyone needs to pull together. If you take the time to make them feel involved you’ll be surprised at what they can deal with.
Some parents prefer to set chores that need to be done before their child ‘earns’ their pocket money. Again, this is entirely up to you and obviously will partly depend on how old your child is. Rest assured, if your child DOESN’T do their chores and pocket money is withheld… well, even the youngest kids will learn from that quick smart! Of course, some parents may feel it unnecessary to pay their children for chores that should be done anyway. In this case, perhaps you can divide the chores into things that need to be done (eg. – cleaning their room or helping with the dishes) and extra chores they can earn pocket money from (like helping in the garden). Another option is to set a minimum amount of pocket money – say, £3 per week – then offer an extra 50p (or whatever you think is appropriate) for any chores you’d like them to do that week, such as making the bed or tidying up the toys. As they get older and their pocket money increases, these chores should become part of what is expected of them, and you can offer different ‘bonus’ chores. It’s a good way to show not only the rewards that come from hard work, but also how important it is to contribute at home as part of the family. Making your child “earn” their money will also help them to start appreciating its worth.
Teenagers and pocket money
Once your kids hit secondary school, there’s little doubt the whole pocket money issue will need to be renegotiated. Suddenly, your child is going to find they ‘need’ a lot more things – the latest iPod, new DVDs, and brand name clothing only please! Be sensitive to all of this – remember, it’s not easy being a teenager and there’s a lot of pressure to ‘fit in’ – but don’t just cave in and give them more money when they’ve run out or buy whatever they want. Instead, use this as an opportunity to teach them about the value of things and the importance of saving. You might like to agree to pay for the necessities while giving pocket money for the fun extras, so decide with your child what you will and won’t pay for. Basic necessities might include: transport to and from school, school uniforms and supplies, clothing for day-to-day wear or a special occasion. Extras could be things like going to the cinema or other trips with friends, fast food and other snacks you’re unwilling to pay for, beauty supplies, and CDs or DVDs. For bigger purchases, perhaps you can agree to pay for half of it while they save for the rest themselves. Decide also when you will pay pocket money. You could decide to pay your child a lump sum at the start of the month, which has to last them till the next month – this will start teaching them the importance of budgeting and make them think about what they spend their money on, rather than blowing it all in one go. Other handy tips to consider include:
- Teach them to shop around – show them that the most affordable clothes can still be stylish, and that there isn’t always much difference (other than price) between these and designer labels
- Compromise – you may be willing to pay for some more expensive items if they are happy to choose cheaper options elsewhere
- Help them think for themselves by making them aware of peer pressure and advertising
Supplementing pocket money
If your child is old enough, encourage them to get a part time job. Keep in mind the restrictions that apply to young people in terms of working hours. During school terms, children can work up to 12 hours a week, broken down to:
- A maximum of two hours on weekdays and Sundays
- A maximum five hours (13-14 year-olds) or eight hours (15-16 year-olds) on Saturdays
During school holidays, 13-14 year-olds can work a maximum 25 hours a week (made up of up to five hours a day), while 15-16 year-olds can work up to 35 hours (maximum eight hours each weekday). Of course, there are also many other great ways for young people to earn money on a more casual basis, like babysitting, or dog walking. They might even like to sell their old clothes or CDs on eBay or similar sites (which doubles as a great excuse to get them to clean their rooms!).
Grandparents and pocket money
Pocket money can be a tough nut even for parents to crack, so it’s no surprise that grandparents often feel a little unsure when it comes to knowing what to do. If you’re a grandparent wanting to give pocket money then take on board the advice we have given, and give the money according to how you think is best. If you would like your grandchild to earn their money then put a list together of small tasks you know they could handle, keeping in mind their age and size. Windows need cleaning? You know who to ask! It’s probably a good idea to talk over your plans with your grandchild’s parents, this way you can avoid stepping on anyone’s toes. You may find that they would be grateful for the help, and perhaps you could agree to go halves on the weekly amount. If the parents feel that their child is already receiving enough money, then consider investing what you was going to spend into a savings account such as the Halifax Kid’s Regular Saver. Pocket money can come and go, but savings may help your grandchild later on in life when they really need it.
Children saving pocket money
We’ve spoken a lot about doling out pocket money and how it could or should be spent, but remember it can also be a useful tool for teaching your kids how to save. In a recent survey by Halifax 77% of the children who took part said they would like to know more about saving, so make sure you are on hand to guide them in the right direction. For a fun and easy way of teaching them how to save, take a look at PocketMoneyPetz, a fantastic microsite created by The Children`s Mutual which will help your child manage their money well. You can also encourage your child to keep some of their money for themselves, while putting the rest in a savings account, where they can watch their savings grow and save for something really special. At the moment, one of the best interest rates for child accounts is the Halifax Kid’s Regular Saver, offering 6% AER. It is a one year, fixed term bond, with a minimum deposit of £10. Check out our articles on the best accounts for children here and here.
Get new money-making secrets every week for free. Sign up here now!