Giving your children pocket money can help to teach them the importance of budgeting, saving and spending wisely.
Allowing children to gain their allowance by completing chores can also help them understand the value of money and how it is earned. This can lay the foundation for long-term financial stability that will see them through their careers and into retirement.
Below, we'll look at the advantages of pocket money for kids and some chore ideas to help them earn while helping around the home.
There are plenty of benefits to giving children pocket money. It can help them improve their understanding of money and the importance of saving up to buy something they want.
An allowance can help kids to learn the advantages of saving, budgeting, and spending money responsibly. It can also help them understand that money is not an infinite resource — because once it's gone, it's gone.
Plus, earning pocket money through completed chores offers children a sense of achievement and reward for doing something positive.
Every family is different, and so are their finances. The amount you give will depend on your financial circumstances and your children’s age.
It can help to speak to other parents about how much pocket money they give their kids. However, don’t feel pressured to match that amount, you should only give your children what you think is right and can comfortably afford.
Some families consider national averages for guidance. For example, the weekly average pocket money in the UK is £7.62, according to GoHenry.
It can help to start with small amounts, such as pennies or coins. As your child starts to become a more savvy saver, you could consider increasing the allowance.
No matter how much you choose to give, a regular allowance can teach your kids to appreciate budgeting and saving money.
You can help your children understand the relationship between money and work by having them complete paid tasks. Creating financial incentives for their chores can help develop your child’s appreciation for money and how to earn it.
Here are some ideas:
A pocket money chores list will depend on your child's age. It’s also important to consider whether your child is prepared to contribute. Chores can help children develop a sense of achievement, but every family is different, so make sure your they’re ready to take on the extra responsibility.
Seeing their accomplishments can be a great way to encourage your kids to complete paid tasks and appreciate their earnings. One option is a pocket money rewards chart, which will chart their progress and visualise their savings goals.
Giving children pocket money can help them understand the importance of saving. With a regular allowance, your kids can build their savings to buy something special. This also gives them an opportunity to understand money management.
It can help to create a savings goal that your child can work towards. For example, if a special occasion is coming up, encourage them to save up to buy a gift.
Some banks in the UK offer children’s savings bank accounts. This can give you peace of mind that your children’s pocket money will be protected from theft or overspending. Your children may also be able to earn interest — and learn about this too.
You can also use pocket money apps with prepaid debit cards, like GoHenry or the nimbl app. This option offers parental control when it comes to chore management and the amount of allowance you give. It can also give children easier access to their money, unlike a traditional savings account, which may require a parent or guardian to withdraw funds.
Alternatively, savings pots and piggy banks are ideal for children who want to watch their savings grow. While payments are increasingly electronic, being able to see and hold ‘real’ money can be easier for some children. It’s up to you whether transferring money to an account online or giving physical coins is more suitable.
Before you choose the best option for your kids, consider their age and what works well for you and your family. You may even want to combine different savings methods to help children understand that digital transactions are as real as handing over cash.
For more information about encouraging kids to save, check out our top tips on teaching children money management.
Check out our other articles for more information on managing your money.
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