DOES POCKET MONEY ‘SPOIL THE CHILD’ – OR TEACH INDEPENDENCE?

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I’ve been wanting to write about pocket money for SO LONG!

Not because it’s an area I have all the answers to, but because there are so many interesting questions around it (like “Does pocket money spoil the child?” – a big one on Google!), and ideas for how to make it work beautifully.

I’ve been longing to dive in, share our experience and hear about yours, so I hope this post resonates with you.

Our family and pocket money

If you’re new around here, to give you some background, my own kids are nearly 11, 9, and the twins are nearly 6. My nearly-11-year-old has been getting pocket money since his 10th birthday, and the others don’t get any yet.

It’s pretty late to start giving pocket money at age 10 – I think, on average, families start giving it much younger. And we only give him £1/week which, again, is much lower than the average.

But I always said we’d only start giving money to our kids when what they wanted was of significantly higher value than what they received from extended family for birthdays and holidays.

We have very generous family around us, so this point didn’t come until Mister was 10. And even then, it was more a case of “If we don’t start now, we’ll never do it” rather than because he desperately needed it.

Why such a low figure of £1? A few reasons:

• we wanted to be able to increase his pocket money each birthday
• we have four kids, and needed to make it sustainable
• we wanted to test our son’s ability to steward a small amount of money
• we wanted our son to learn patience in saving up for what he wanted

Now we are nearly a year in, and it’s been a successful experiment. He’s been very diligent in saving up for things, but has also been grateful for the £10 here and £20 there that his relatives have given him when we’ve met up.

He’s often chosen to spend a few pounds on sweets for when friends come for sleepovers – but has also learnt that this significantly sets back his saving for larger items, such as a new controller or game for his XBox. He’s learnt that you can’t have everything all at once, and has been pretty sensible in weighing up different options to decide what to buy first.

We’ll be increasing his money when he turns 11, perhaps just to £1.50 for now, which will slightly widen his options without starting a trend of too high an increase which we would struggle to maintain when all four of our kids are receiving pocket money.

Why do kids need pocket money?

Pocket money is a great way to start giving our children some financial independence. It enables us to teach them about budgeting – spending, saving and giving – and allows them to learn through their own mistakes too. It shows that we trust them enough to give them some of their own money, without an agenda of what to spend it on.

It’s also helpful for us as parents. Giving a small amount each week or month means that we know where we are with our own budgets. The alternative is that we don’t give anything regularly, but end up just buying things for our children when they want them, which can work out pricey and unpredictable. Not cool.

Giving pocket money at a young age and gradually increasing it provides helpful scaffolding to children and teens as they learn how to deal with bigger and bigger amounts of money. The alternative is that they get to 18, suddenly start receiving a student loan or income from a job, and end up going crazy with it!

As long as it is carefully managed, there is absolutely no reason why pocket money should spoil a child. Rather, there are some awesome skills that kids can pick up through dealing with their own money.

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Why pocket money should not be given

We all see things differently around the subject of money, and this is a particularly controversial topic when it comes to pocket money. Are there situations in which pocket money should not be given? Yep, I think there are.

One situation would be if the child in question doesn’t have the cognitive ability to be able to steward their money well. This might be due to additional needs, a lower emotional age, or some kind of trauma which is being dealt with first.

Another reason is if you can’t afford it. If money is so tight that just putting food on the table is a stretch, please don’t think you need to be giving your child pocket money in order to teach them good budgeting skills. As they get older, you can involve them in your budget, showing them what you spend money on and why. And when your child is a teenager they will be extra motivated to get a part-time job to increase their income and opportunities.

Many entrepreneurs started life with very little – it often gives us the self-motivation that we need to work hard – so it’s no long-term hardship if you can’t afford to give your child pocket money right now.

There is also a school of thought that says children shouldn’t be given pocket money but ‘share’ the family money. If they want something, that something is discussed with parents, and decisions are made based on if it can be afforded, if it’s a good buy, etc. (You can read more about this approach over at Happiness is Here.)

Finally, some parents would withdraw pocket money as a consequence for rudeness, poor behaviour or laziness around the home. They don’t want pocket money to spoil their child, and so they remove the privilege if it’s not developing the skills and traits they wish to nurture in their child.

Personally, I haven’t done this, as I like to see pocket money as a set income that children can work with and budget for. I would rather withdraw other treats if needed, like a later weekend bedtime or after-dinner sweets .

However, if your philosophy connects pocket money with chores and responsibilities around the home, and your child hasn’t fulfilled their side of the bargain, then yes, it makes sense to withdraw pocket money in this situation.

When should you start giving pocket money?

Again, there are such different schools of thought on this! Every child develops differently, so I think it’s helpful to think in terms of skills rather than actual age.

I would say your child is ready for pocket money when they:

• recognise money and know which coin is which (in the UK, this is taught in schools around Year 1/2 – age 5-7 – but you can teach it earlier if your child is ready)
• count to 100 (makes it much easier for them to relate pence to pounds, cents to dollars, or whatever your currency is)
• can store money safely and sensibly (my nearly-6-year-old twins play with any money they get – it doesn’t stay in the piggy bank, and it gets thrown around, separated into myriad different bags and containers, and no one knows where it’s gone! So now I keep a note on my phone of any money which has been gifted to them, and we avoid them having physical money in their bedroom. And we DEFINITELY won’t be giving them pocket money for a while yet!)
• has started asking for things which you can’t or won’t buy them (between birthdays and Christmases)
• understands the concept that saving small amounts of money adds up to a larger amount

Should every child be given pocket money?

If you give money to one child in your family, you need to give it to every child (unless, of course, they don’t have the cognitive ability to handle money – see above). Fairness is very important in family life!

I don’t believe you necessarily have to start it at the same age with each child, though. As I said above, each child is different, and one of your children may develop money-handling skills much earlier or later than the others.

However, if it’s going to create unnecessary arguments (“You gave it to him when he was 7 – why can’t I have it now I’m 7?”) then you’ll have to weigh up the pros and cons of giving versus not giving. And I would definitely urge you to avoid a vastly different ‘pocket money age’ for each child.

Does pocket money teach independence?

Yes and no. It encourages your child to make their own, independent decisions about what to buy, when to buy it, and who to buy it from. It is a real confidence-boost for children to know that their parents trust them and are allowing them to make these decisions for themselves.

But if you give too much, or too early, it can teach children to become lazy and dependent on you. If there is no reason to get a part-time job, or to do extra chores in order to earn money, then pocket money is likely to dampen a child’s independence (which is probably why so many people feel that pocket money has the potential to spoil a child).

Try setting pocket money at a level just below what feels comfortable to them and you. This is easier than it sounds. You probably have a gut feeling right now of what you want to give your child – well, go with the lowest amount within the bracket you’re thinking of. You can always increase it later if you change your mind – but you can’t decrease it!

If the amount of pocket money you’re giving your child means that it’s taking them around a few weeks to save up for the cheapest items on their wish list, then this is much more likely to teach them the discipline of patience in saving. (Although not if the cheapest item on their list is the latest iPhone. LOL.)

My son gets £1 a week, and the cheapest items that he ever wants (apart from sweets) are usually XBox related, and cost around £7-10. So even for these, he needs to exercise patience and commitment to saving for a few weeks in order to afford them.

How much money should I give my child for chores?

Whether pocket money should be linked to chores is another loaded question!

One school of thought says that pocket money is something to be ‘earned’, and therefore children must complete a short list of weekly tasks in order to receive their pocket money in full.

Another school of thought says that pocket money is a gift, just one of many ways that you bless your child financially, so it should always remain the same amount. Chores are a separate issue, because children are expected to help around the house as part of their commitment to being a family.

Hear me on this: there is no right or wrong approach.

Sure, you probably favour one over the other, but that’s probably because you have different ideas about what pocket money is for than others do.

If you’re worried about your child not learning any life-skills, treating your home like a hotel and not cleaning up after herself, then you’ll probably be wanting to use pocket money as a kind of reward system, like a mini job, where your child is rewarded for what they do – a bit like an adult’s work.

But if your motivation for giving pocket money is to teach budgeting skills, then the second option is probably going to be more your style.

Even if you go for this second approach – which is what we do as a family – there will come a time when your child needs extra money in order to buy something they’re saving for.

I do think it’s good to give children options for earning a little extra on top of what you give them, as it teaches them to be creative in boosting their income. They learn to take control of their money, rather than feeling like their budget is set in stone with nothing they can do to change it – a good skill for adult life!

Plus – many of us pay others to clean our homes – so why not pay our kids if they’re looking to raise extra cash?!

In terms of how much to pay for chores, take into account:

• the nature of the job and how long it will take them (I might give my 6yo more money for a dusting job than I would give my 11yo, for example, as it would take the younger child longer)
• what you give them as pocket money (keep the payment for chores in line with their pocket money – e.g. if you give £5 pocket money, don’t give £10 for a job, but don’t give £1!)
• how much money they need and how much time they have to save for it (your privilege as a parent, and not a boss, is that you can choose to slip your child a ‘little extra’ to reward them if they’ve been working and saving hard!)

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In an increasingly cash-less age, should pocket money be physical or digital?

This is a great question, and very much dependent on your situation. I give my son cash each week, but don’t always find it very easy to find an Actual Pound in my purse.

If you prefer to do things digitally, you can use an app like GoHenry or FamZoo to top up your child’s pocket money each month, and then they can spend it using their card. These apps contains lots of helpful features to encourage your child to set saving goals and budget well – but both of them incur a monthly fee.

A simple alternative would be to simply keep a record on your phone of how much money each child has. When they want something, you simply buy or order it, then remove that money from their total.

Or, depending on the age and character of your children, you could make a visual representation of this and put it on the fridge, so each child can clearly see how much money they have.

As your child gets older, they will be able to set up a bank account and use a debit card. At this stage, the simplest way to give pocket money or an allowance is via regular standing order.

Using cash where possible does help children (and adults!) keep better track of their spending, as it’s so much more visual and obvious when you have less. Even when my son wants to buy something online, he still has to pay me in cash so that I can make the purchase, so in that way he’s getting a very tangible idea of what he’s spending.

But as kids grow older, it’s important that they learn how to use money digitally, so don’t worry if you need to go cashless from the word ‘go’.

Does pocket money spoil a child?

Absolutely not!

I mean, it can – like anything, if given in the wrong way.

But it can also teach your child amazing skills in budgeting, patience, delayed gratification, and even generosity, as they learn of the good their money can do when it is gifted to others less fortunate.

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Over to you – do you give pocket money to your child? At what age did you start? Do they have chores and other responsibilities expected of them? Let’s chat in the comments!