It sounds simple: once your child is old enough to get an allowance, just put something in his hands once a week.
To the control-freak person like me, there’s an issue that jumps right out: too much is left open. It’s one of those things that most parents do, give pocket money. But not one that gets discussed often, leaving some of us with a lot of questions.
Like when do we start? How much should I give? Are there rules? Can they just buy anything?
Related: Why you need a budget in your life.
1. When should you start giving pocket money?
It’s a good idea to start young with an allowance and as I found out, 5 or 6 is usually a good age to start. It teaches them responsibility and it gives children the time and space to learn from spending mistakes (buying a piece of candy in a spur of the moment when actually they wanted that toy car). Also, it teaches them that sometimes you need to save to get what you want, i.e. it teaches them the power of discipline and postponing pleasure.
It’s also wise to set boundaries to what they spend their money on up front, and to remind them of the rules regularly. For instance, if they want to buy candy, they’re not allowed to eat it right before dinner as it would spoil their appetite. Do remember though, that your child is supposed to make mistakes with his pocket money. This is how he’ll learn not to do stupid stuff with it later when he’s grown up.
When you start giving pocket money all depends on your child. But it might be good to consider starting when you feel your child has some basic understanding of money. For instance:
- He understands you need money to buy something from the store
- He understands, or is ready to learn to understand, that spending all of his money today means there is no more until the next payment.
- And, in consequence, it might be a good idea to save some money and not spend all of it.
2. How much pocket money should I give?
The first obvious question is, how much pocket money should you give a child. Especially nowadays when their wants are so big! (My son would like a new Lego set, preferably, each week.)
Again, there is no straight answer to this question (when is there ever a straight answer in life?). Several things to take into account:
- Your family’s budget;
- How much do you want your child to be able to spend freely?
- What do you want your child to be able to buy himself;
First of all, it should fit into your budget. Don’t worry about what the neighbors are giving. Or the other parents at school. Your child will learn well enough on small amounts as well, so first review what you can give.
Secondly, take into account that they’ll be buying stupid stuff. You don’t want the amount to be so big that you get stressed when they’ve spent it all on something useless. The idea is that they get to make mistakes, so give them an amount that you’re comfortable with when they go wrong.
Thirdly, especially as they get older you need to take into account what you expect them to buy themselves. Do you want them to buy their own school lunches from their allowance. How about a ticket to the cinema if you want to go out with them for an afternoon? Or is the pocket money completely free spending money, in which case the amount can be lower.
3. Earnings or a Gift?
The second question that comes to my mind is: should an allowance be a guaranteed gift, or should kids do something in exchange for it. Now, I know most of you are now thinking that of course kids should do something to earn the money. After all, that’s how things work in real life as well, but consider this. Should your child do chores for the family because it’s being paid for it? Or because everybody should chip in to make a family?
Personally, I take the middle ground and mix both up: there are basic chores I expect my son to do, and then there is the extra stuff he can choose to do to earn a little spending money.
But, I’m also a big fan of the principle of earning your money. I believe it teaches children that they are not entitled and that if they want something out of life, they are the ones with the power to make it happen. After all, unless you’ve won the lottery, nobody is going to come knocking at your door to hand you a big fat check. In fact, even the lottery money you sometimes have to cash out yourself!
But how do you get a young child to buy into this?
- Explain what the pocket money is and what it’s for
- Establish rules around spending
- Start with chores that your child will be most likely to participate in and expand as he learns and gets older.
For instance, our son loves to help out in the kitchen. So that’s where I started. Cleaning out the dish washer and putting things in their proper place. He puts the things that go into places he can’t reach on the counter.
4. Boundaries and Rules to pocket money
The third question I asked myself is, should kids spend their money on just anything?
Example: what if your child was born with bad teeth (this happens, I actually know such a child.) Should they be buying candy whenever they like? What is your child is already struggling with weight? What if you’re morally opposed to certain products, such as video games or toy guns? Think this through before you start giving pocket money. Then sit down with your child and explain that there are rules to his or her pocket money. Perhaps write the rules down or create a card with symbols. Especially in the beginning, make sure the rules of spending get repeated each week.
5. Where to put it?
Well, besides the two obvious options, bank or cash, also think of how you want your child to keep track of their money. In a piggy bank in their room? Are they big enough to keep it in a safe place? Or should it go in a bank account with the statements in a colorful binder? My son has his own piggy bank. Or actually, a tree bank. The top screws off, so he can take out his coins and count them. In short, take your child’s character and preferences into account as well.
So, are you ready to start the money lessons? Do you still have questions? If so please let me know in the comments!