When to start with Pocket Money | Chores based or no strings attached? | How much pocket money to give?
Giving Pocket money can help your children learn about the value of money. It can also teach them money-saving skills. After all, when children get pocket money they have to make decisions on spending and saving. They’ll have to decide what they think is worth saving for.
These skills become more and more important when your children grow up. So giving them pocket money is in itself a good idea. But there are still a lot of decisions to make. For instance, how much do you give them? And when do you start? Do you give them a standard amount? Or do you make them work for it?
The answers to these questions depend for a large part on you as a parent. What are you comfortable with?
We’ve created this guide to help you answer these questions. We’ll start with a quick overview of the benefits of giving pocket money. Then we’ll discuss some common approaches to pocket money. Last we’ll talk about when to give pocket money. There will be an allowance chart so you can see how much money you should give your child based on their age!
The Benefits of giving pocket money
Why give pocket money at all? There are plenty of benefits, long-term and short-term, for your children.
Boost your children’s financial education
Money can be a difficult concept for children to fully grasp. The most effective approach to teaching them what money is and how it works is to have them use it themselves. Giving them pocket money to spend on their treats, toys and games might make them begin to understand how much the things they desire cost in contrast to one another.
Learn them how to save and when to spend
Once children understand the cost of things, they’ll also gain the knowledge of how long it takes to save up for them. It can be a great way to teach them the joys of saving up for something bigger. They get a great sense of achievement when they finally have enough money to get that toy they really want..
It’s a lesson in responsibility and independence
All of the above means that pocket money teaches children to make decisions for themselves and live with them. If they have their own money, they can choose whether or not to buy the magazine from the corner shop. If they do, it takes longer before they can buy a toy. Or get that skin in Fortnite they’re looking for. This also reduces their pester power. If they chose what to buy with their money, they can’t ask you to buy another toy for them.
Are there any downsides to pocket money?
This sounds great of course, but some children spend their money frivolously. In fact, very few children save their pocket money. So what’s left of the benefits of it all then?
The big thing is to let them make their decisions, but let those decisions have consequences as well. If a child buys snacks with their pocket money and still gets the toys they want, it undermines the lessons pocket money has to teach.
An added difficulty is peer pressure. Children compare themselves with each other. That can lead to a lot of frivolous spending. There are no easy answers to this, but try to have an open conversation about what the money is for and what they want to do with it.
Most common pocket money approaches
There is more than one way to give pocket money. We can differentiate the common approaches with two questions. Do you want to give pocket money as an allowance that stays stable, or do you want to give pocket money for performed chores? Do you want to give your pocket money in cash, or in a digital way?
Chores-based vs No Strings Attached
Should you give pocket money in exchange for performing chores? There are arguments for and against that. The biggest argument in favour is that it instils the idea that money does not magically appear out of nowhere. This teaches children about the value of money. The biggest argument against is that it enforces the idea that you only have to work if you’re being paid for it. Some chores need to be done whether you get paid or not.
Cash vs Digital
Do you give pocket money in cash, or in some kind of digital way? Pocket money used to be very cash-based. Recently, this has started to change, however. The BBC predicts that in the coming years, a majority of children will receive their pocket money digitally.
One of the drivers of this change is the places where children spend money. With online games such as Fortnite becoming more and more popular among kids, this also becomes a more regular place for them to spend their money.
The benefit of using cash is that you know where they can spend it. Digital money is more complicated. The downside to cash is that the biggest thing they can spend it on is snacks. And if you’re trying to teach them to eat healthily, you might not want them spending their pocket money on snacks.
Different ways of giving digital pocket money
There are ways to give digital money to your child responsibly.
- Give a gift card – Instead of giving them money that they can spend anywhere. You can give them a gift card that they can only spend on things that are appropriate for them. If they like games you can give them a Playstation Store gift card for instance. This way you know what they’re spending their pocket money on. A downside is that this limits their ability to make their own choices, limiting the lesson of independence and responsibility.
- Give a prepaid credit card – When you know that they are more responsible, you can give your children a special prepaid credit card. Here you can control how much money they have, but they can spend it on what they want. An example of a prepaid credit card made especially for teens is the Bitsa Young card. You can load their pocket money on their prepaid card with a Bitsa gift card. There are more cards out there that might be suitable for you. We’ve compared prepaid cards here. For the full list of available prepaid credit cards on Recharge.com, visit our prepaid credit cards page. Since these cards can be used to pay for anything, you should be sure that your child is of suitable age and responsible enough.
- Use a pocket money app – There are apps built specifically for pocket money. They land in the middle road and can be suitable from a younger age than prepaid credit cards. They allow your child to spend where they want, but they allow you to check their spending and control the pocket money coming in. This guide compares the different pocket money apps on the market right now.
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When should you start giving your child pocket money?
Some parents start giving their children pocket money when they are about four or five years old. Others wait until their children are nine or ten years old to old. Generally speaking, most parents start with pocket money when their children are six years old.
On average, Irish children up to 12 years old receive €6.40 per week. For teenagers older than 12 years that average goes up to €10.40 per week. The children typically spend that money on food and clothes. Games are also popular.
Not every country in Europe gives the same amount of pocket money. Research done by IGN in 2014 shows that at that time the European average was slightly lower. 5 to 10-year-olds receive €4.75 a week. For 10 to 15-year-olds that average is €9.50. The same research shows that about 80% of European children receive pocket money in some way.
Allowance chart by age
So how much pocket money should you give your child? The allowance chart below shows the amount of pocket money that is generally considered appropriate per age group. This chart is in Euros. You can use this guide if you want to know what the appropraite amount of pocket money is in Pounds or Dollars.
