Pocket money is one of the first ways your child develops his or her relationship with money, learns the basics of managing finances, as well as developing an appreciation for money.
How much pocket money should you really give them? When is the best time for this? Below, we'll give you some insight into the best ways to give your kids their first paycheque.
The truth is, there's really no golden rule here. The real value of pocket money isn't only financial, it is to give your child an understanding and appreciation of money, and why and how he or she deserves to earn that money.
When you decide it's the right time to start giving your child money, it will slowly begin the end of your child having to ask you for this or that when he or she wants to buy something, and instead begin developing an independence.
Unsure when to give your child pocket money? We suggest explaining what pocket money exactly is, and then ask your child if they feel they're ready to earn it, along with the responsibilities that are associated with money.
2) For What?
The goal of giving pocket money should always be to teach your child the basics of responsibility and independence, but never to send a negative message like "Here you go son, here's ten dollars, buy whatever you like and stop bothering your Mother".
Pocket money will teach your child how much is earned, such as in exchange for household chores. Because who wouldn't love an extra helping hand with the dishes?
3) How Much?
This can be a real tricky one for all parents. The best way to approach is to start small, and increase the amount you give as your child gets older.
Initially, the amount of pocket money given should just be enough to buy something small and positive (educational toys, books). As your child gets a bit older, the pocket money can increase to purchase computer games, clothing, sports equipment, and the odd chocolate bar.
Earning pocket money will also teach your child the importance of saving for something they really want.
4) How Often?
The frequency of pocket money depends on the age of your kids, and what they will be spending the money on, ideally. Again, it's a good idea to always start with smaller amounts, but paid more regularly. You could pay them weekly and remind them if they spend it all in one day, they'll have to wait until next time to get a top up. This can teach short term budgeting early on, and prepare them for the important choice of saving versus spending down the road.
5) For What?
Many parents wonder whether pocket money and the amount should be based on a reward versus punishment system - such as school grades, performing chores around the house, good and bad behaviour, etc.
We wouldn't recommend a reward versus punishment system for pocket money, however earning it in exchange for chores is often a good approach as it teaches your child the important of helping out, as well as working and earning a salary.