The Ultimate Guide to Pocket Money & Allowances
Call it pocket money, call it an allowance – whichever word you use to describe it, pretty much all parents and children understand the concept; where parents/caregivers give their child an amount of money, on a regular basis, to spend, for the most part, as they choose.
But many parents struggle to know how much pocket money to give, how often to pay it, and how and when to introduce it. So with the help of some online experts we have pulled together a short and simple guide to help you tackle all of these important questions:
What is pocket money?
These dictionary definitions show us the simple meaning of pocket money:
"Money which children are given by their parents, usually every week." Collins Dictionary
"A small amount of money that parents give their children, usually every week or every month" Oxford Learners dictionary
Why is pocket money important?
We are often asked if giving pocket money is a good idea and why it is important for children. Today online really nail it on the head:
“Beyond just enabling children to buy what they need, an allowance offers opportunities for parents to inculcate good money management habits in their children.”
Making your child responsible for their own expenses and learning to cope with budgets are valuable lessons for adulthood.
At the same time this also emphasises the importance of the decisions parents then make around how much pocket money to give, how often they give it and the spending rules they set around this.
Getting these details right will increase the chances of your child developing good financial understanding as they grow up.
What is the right age to give pocket money?
There really is no right or wrong answer to this – but we particularly liked this way of thinking from the experts at Money Supermarket:
“As a rule of thumb, your child is ready to start managing pocket money if he or she understands these three basic truths:
1)You need money to buy things,
2) Saving money will allow you to buy more expensive items,
3) If you spend all your money in one go, there will be no more until the next “payday”
In short, the right age to start giving pocket money very much depends on your child. This might be 5 years old for some children or it could also be 9 or 10 for others.
Try using these basic truths to assess if your child is ready to handle pocket money.
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How much pocket money should I give my child?
The Asian Parent offer this great advice:
“Involve your child in this decision, start by listing items they want/need to spend on i.e., food, books. This makes it easier for you to decide how much money to allocate. But remember that just because You need to decide if this is a valid request or not!”
Decide with your child exactly what they do need to cover in advance so no “surprises” and agree on a set amount. You can always amend this at a later stage should you both need to.
How often should I give pocket money?
As adults we are used to a monthly period of salary allowances and expenses – but a month is a long time for a child.
Consider splitting this down and building up gradually from daily to weekly to monthly as your child gets more used to managing money:
“Kids don’t really know how to budget, at least not in primary school. If they have a week’s worth of money, they’d likely spend it quickly or misplace it. Give pocket money daily at the beginning and slowly teach them the concept of ownership. You probably can let them have weekly pocket money from primary 5 or 6. Since they are in primary school, you most likely only need to give them pocket money when they go to school from Monday to Friday.” Moneysmart
How can I manage what they are spending their money on?
If you are giving pocket money using cash then this is almost impossible!
Instead try using the Canvas card app and prepaid visa card. Then you will have real-time access to all spending and you can also freeze or lock the card at any moment.
Have fun and remember nothing is forever, you can work with your children to adapt how much and how often you give pocket money and take advantage of the many tools that can help you along the way!
Want to know more about the Canvas prepaid debit card and App? Simply share your details here and we will be in touch.
