Teaching children that you can’t always get what you want and that money doesn’t grow on trees is a task all parents are faced with. One way to tackle this is with the introduction of pocket money. It offers children a valuable insight into the real world, and can be a useful tool to help shape their financial behaviour in later life. Lily Smith investigates…
Parenting expert Elaine Halligan thinks pocket money is great way to help little ones to learn to handle money sensibly. “Managing money is a key life skill and it needs to be taught both at home and school,” she says. “We give our kids swimming lessons in order to keep them safe in water; we don’t just throw them in the deep end. It’s the same with pocket money.
“We live in a world of instant gratification, especially with children. We can get around this by implementing pocket money and by giving them some choice and control on how to spend it.”
But with no universal rule or general consensus, it’s difficult for parents to know the best way to handle pocket money. Every family is different, and opinions will vary due to financial situation, friends and values.
A recent survey revealed that the average amount of weekly pocket money given to children in London is £8.26, so it certainly seems as if the days of having 10p to spend on penny sweets are long gone. But how much should children be getting?
No child wants to have the least pocket money in their class, nor do they want to stand out as having the most. Elaine suggests it can be useful to discuss allowances with other parents to get an idea of what other children are getting and what seems fair.
And when is the ideal time to introduce it? “As soon as they learn the value of it,” says Elaine. “I think that giving children a small amount of money at primary school age is best because you’re giving them your trust and a sense of responsibility.”
When your child is given their weekly allowance, it’s important they understand their options, though. Elaine suggests setting up three jars in the house: a ‘saving’ jar, a ‘spending’ jar and a ‘sharing’ jar to make these options clear.
Spending pocket money on bags of sweets or toys can be tempting for little ones. Try talking to your children about the consumer messages we’re faced with every day. “Adverts can manipulate us, so it’s important to remind them to think twice about what they spend their money on,” says Elaine.
Learning the importance of sharing is also a valuable lesson. You could encourage your little ones to spend the money in the ‘sharing’ jar on ingredients to bake a cake for someone else or put it towards a charity of their choice, suggests Elaine.
And then, of course, there’s the reward debate. In some households, children are rewarded with pocket money for chores, good grades or completing their homework, mirroring the working life they will experience later on. Elaine, however, disagrees with this approach. Housework and homework are simply part of life, she says: “If they do big jobs, then yes, they could get extra; but children are part of the household anyway so should be doing chores.”
So, managed well, pocket money can certainly have a positive impact on your child’s life, opening up the important world of financial responsibility. The more we shield our little ones from the financial realities in today’s society, the longer we deny them the chance to develop essential life skills. As Elaine says: “We need to make them canny consumers, savvy savers, generous givers and insightful investors. In this way, this generation can grow up handling money sensibly and self-assuredly.”