Proving your child with pocket money is a great way to begin teaching financial lessons they will need to know throughout their life. Financial advisers suggest to start providing pocket money as soon as they are able to count which is typically by age five or six. The amount to give them can depend on factors such as their age, how often you will give them money, what they intend to spend it on or save it for and the financial situation of your family.
The Age Of The Child
Pocket money given to a child should be age appropriate. It is recommended to start small, with the amount increasing with the child’s age and their ability to understand more in-depth financial lessons. A common suggestion is to give £1 for each year of age, per week. For example, an eight year old child would receive £8 each week. Whatever amount you decide should be reasonable. Providing children with too much money can have more negative than positive results.
Take into consideration if you are expecting your child to earn the pocket money by completing chores or tasks. For example, if you pay per chore consider pricing it so the total amount given still equals the dollar per year of age, or another reasonable amount. Some parents use this method to teach lessons about earning money through work.
How Often To Pay Them
Payment frequency depends on what works for your family. You can start younger children out with weekly payments, switch to bi-weekly as the age and eventually monthly. This will start good budgeting habits because the will have to learn to make the amount last for a longer period.
You can give pocket money to your children weekly or monthly, whichever is best for your family.
Pay them on the same day whether it be each week or month. This teaches consistency and helps them learn how to plan a budget, how much to spend and how much to save.
How Much To Pay Them
Help your children set a budget to help decide the amount of pocket change they will need to cover their expenses. Showing how small things add up over time is a valuable lesson to learn. Go over the expenses your child has for the month. Break the list into two categories, “wants” and “needs” and decide which “needs” you will cover for them and the “wants” for which they are responsible. This totaling up of cost teaches them how to better plan their spending and also how much of your money is spent on them, too. They might make better decisions on spending their money if they consider having to cover your part of the list, too.