We had quite a lot of feedback after our last post about kids and money, so here’s more thoughts on the same topic.
As I discovered when chatting to a group of parents about kids and pocket money, the topic can get quite emotive! There are some quite disparate views about how much, when to start and whether or not it should be for doing family/household chores.
Everyone in the group gave their children pocket but the amount was the tricky part. It seemed to be linked more to peer pressure about what other children were getting, rather than what the parents thought was appropriate.
This story from one Mum really highlighted the children’s understanding of the value of money.
“It was Christmas and each of the three kids got an envelope with $20 in it from their Aunt. The 11 year old got mildly excited about $20. The seven year old thought it was a lot of money and the three year old wondered why his Aunt had given him a pretty picture…”
Speaking to a Dad a couples of weeks ago, he explained their regime. Their seven yo is expected to help out with chores around the home without pay, just like any other member of the family.
“After all”, he said, “I don’t get paid extra for doing the lawns.” However, they do pay her pocket money to for extra work she does around the home.
All the parents expected their children to do chores but they were divided about whether or not the pocket money should be linked to doing chores or not. From our very unscientific research it seemed there was a link between the parents own experience with pocket money and how that now related that to their children. Those that got pocket money for doing chores expected their children to earn their pocket money and vice versa.
None of them had set guidelines about what the pocket money could be used for and what happened if the child ran out of money. Actually, when I asked that question I got blank looks, they hadn’t considered having a conversation with their children about pocket money, they just handed it out.
One of the Dads (we’ll call him Bill) related his experience with pocket money. He clearly (and excitedly) remembers as a child saving all his pocket money for the big family trip to Disneyland. His brother Sam, as usual, spent all his pocket money as he received it. In Disneyland Bill bought himself a toy, very proudly handing over his hard saved money. Then Sam wanted one as well and kicked up a fuss, so Bill’s parents bought the toy for Sam. You could see that even after all these years, Bill still feels a little bitter that Sam got the toy even though he had no money.
“What was the point of me saving?” he said. “Sam was rewarded for spending all his money yet I wasn’t for saving mine.”
So after all this discussion, (some of which got a little heated), we’ve come up with a few suggestions that you may like to consider when thinking about the kids and pocket money issue.
- Think about the age of your child. If they don’t have a concept of numbers and counting, then pocket money won’t mean much.
- The time to start giving pocket money is when there is awareness that you have to pay for things. Talk about it on a trip to the supermarket, or movies. Starting pocket money at school age is a good option.
- Give your child a set amount that isn’t linked to chores and then they can earn additional money for other odd jobs that they do. This is the middle ground around the dilemma of paying for chores or not. Be aware that this takes a bit of planning as you need to be very clear about what the set chores are and what the extras are, and how much each one is worth. The fridge chart usually works well.
- Be clear on why your kids get money. One of the reasons for giving pocket money is to start to teach the value of money. So set up a series of jar’s or money boxes for specific purposes. For instance, you might consider something like, a savings jar, the spend now jar and the donation jar. Explain to your children what each of these mean so it isn’t just random.
- There are no hard and fast rules about the amount to give, it is entirely up to you and your own personal circumstances. You may want to talk to friends to get a feel for what they are doing so you aren’t too different from your children’s friends but you don’t have to be bound by that.
- As parents we need to be disciplined. Pay the pocket money regularly; for example the same day each week, don’t miss weeks, and stick to the routine.
- In the early stages your child is going to get it wrong. They will blow all their savings; or run out before next pay day. You need to let them make these sort of mistakes, and not be the money tree and replace the savings or top the pocket money up.
- You may want to set some criteria about what the pocket money can be spent on but don’t be too restrictive, this is a learning process.
- As your child gets older, you will need to increase the amount. And make sure you have the conversation about what you are still going to pay for, versus what they are expected to pay for so there are no grey areas.
Hope these points help you navigate the decision process around pocket money.
In order for you to help your children learn about money, make sure that you are happy with your own financial strategies. If you would you like to discover strategies to become financially healthy, drop us an email or click on this link to find a day and time that suits you to have a chat with us – it’s completely free!