Pocket Money For Kids – 14 Tips For Giving Kids An Allowance
Thinking about giving pocket money for kids? Here are the best 14 tips for giving your kids an allowance that is both fair and fun.
Let’s chat about pocket money for kids.
For some parents, an allowance is a way to teach financial responsibility to their children.
Others believe that money ought to be kept off the table when it comes to families contributing time and effort to the household (that kids should be helping out for free).
Whatever choice you make, there are some important principles to keep in mind if you want to give your child an allowance.
Consider these suggestions to help you decide what will work best for you and your family.
Giving Your Children an Allowance
POCKET MONEY FOR KIDS
1 – Pick a starting age.
Most parents usually instigate a pocket money routine when their children actually begin asking for it (and that can begin at any age!)
I remember for me I was about 12 when I first asked for one (and my sisters were 10 and 6.)
Generally speaking, kids are ready for an allowance when they can understand the different values of currency.
That’s usually when they’re about five or six years old.
POCKET MONEY FOR KIDS
2 – Determine the amount.
The current rule of thumb estimates $1 for each year of your child’s age – this is a pretty good guideline, especially if you are encouraging your kids to save.
You also need to consider the financial situation of your family and what expenses the allowance is intended to cover.
If 50 cents per each year of your child’s age suits you better, go with that instead!
For me as a 12-year-old – YEARS AGO mind you – my weekly allowance was $2 a week, while my 10-year-old sister got $1 per week and my 6-year-old sister got 50 cents a week.
I’m sure times have changed since then!
POCKET MONEY FOR KIDS
3 – Clarify the rules.
The American Academy of Pediatrics takes no definitive position on allowances.
However, they do say that the rules regarding allowances need to be clear.
For example, if you require 10 percent to be put towards savings, explain your expectation from the start.
And remember to enforce your rules!
Are they allowed to spend it on whatever they want?
Then make that clear.
My rule with pocket money was no wasting money on online games (like the things you can buy inside an app – that is one of my pet hates when it comes to wasting money!)
POCKET MONEY FOR KIDS
4 – Be consistent.
Pick a payday and stick to it.
Is it going to be every Friday morning or Sunday night?
Decide in advance and know that a weekly schedule is often the most convenient.
POCKET MONEY FOR KIDS
5 – Keep discipline separate.
To get the maximum value out of using an allowance to teach financial skills, use other methods to discipline your children.
That is if your your children are really annoying you, that shouldn’t impact the amount of pocket money they get.
Restrict computer time instead rather than withholding a child’s allowance.
POCKET MONEY FOR KIDS
6 – Tackle the chores issue.
You need to decide in advance if you want to connect the completion of chores with your children’s pocket money.
What’s your expectation?
Linking an allowance to the completion of certain chores tends to be a wishy-washy grey area.
You may decide that paying for performance is the way our society operates.
On the other hand, you may instead want to encourage family teamwork apart from direct compensation (so their pocket money comes regardless of that).
Using Other Methods to Teach Financial Responsibility
POCKET MONEY FOR KIDS
7 – Create a family fund.
Consider allocating some money that all family members can collaborate about when it’s time to spend it.
This is a cool way of getting all your kids to discuss the way they want to save or spend that set money.
You can hold family meetings to discuss vacation budgets or buying back to school supplies etc.
I remember one of my favorite family holidays was when my daughter really, really wanted to go on a cruise and I said if she could find one that cost $2500 for the four of us to go for a week, I would book it in.
Lo and behold, there was a 50% off sale happening at the same time (10 day travelling all through the Pacific Islands including New Caledonia and Vanuatu), and we ended up having the best holiday ever thanks for my then-12-year-old sleuthing!
POCKET MONEY FOR KIDS
8 – Prepare for special purchases.
Kids will sometimes want to make some larger purchases, which is why it’s great for them to have some pocket money so they can begin saving towards that special purchase.
Be willing to listen to their reasons for wanting to buy a musical instrument or new sports equipment and do what you can to help them reach that financial goal of theirs.
POCKET MONEY FOR KIDS
9 – Provide opportunities to earn money.
As I mentioned above, sometimes kids have their heart set on a bigger purchase that pocket money will not cover (even after saving for months).
If possible, see if your kids can still have a chance to acquire their own funds if you pay for special tasks.
That might include raking the autumn leaves or cleaning the barbecue grill at the end of the summer.
My kids can earn money by washing and grooming the dogs (saving me money because I don’t need to take them to the groomers) and other tasks that are helpful to me and well worth the payment.
Tips for All Families
POCKET MONEY FOR KIDS
10 – Encourage philanthropy.
When your kids begin thinking about money management, it is great to get your kids develop a habit of giving.
Talk about the charities you support or a nonprofit group that has helped your community.
Praise them for doing their own research on causes they are personally interested in.
Make sure to practice what you preach – don’t just talk the talk; you need to walk the walk too.
POCKET MONEY FOR KIDS
11 – Promote savings.
Show kids how even saving small amounts can dramatically add up over time.
This is something my dad definitely taught me well.
Save your pennies because those pennies soon add up to dollars!
This is also an opportunity for you to talk about short- and long-term goals.
Buy a piggy bank for small children to teach them the skill of savings and assist older ones with opening their own bank account.
POCKET MONEY FOR KIDS
12 – Decline advances.
Allowances teach kids about trade-offs and rationing their money.
So, please resist the temptation to provide a bailout.
Nothing will happen if you say no, I promise!
Make them wait until next week if they spend all their money in one go.
This is how they will learn to better manage their money in the future.
POCKET MONEY FOR KIDS
13 – Be flexible.
On the other hand, there may be times when you cut your children some slack.
Maybe your 10-year-old son was saving up for something special that is now suddenly 70% off but he is still $30 short.
Can you purchase this item for him and hold it for him until he saves the rest?
You can use your own discretion here.
POCKET MONEY FOR KIDS
14 – Look for outside income.
Did you know there are lots of entrepreneurial kids who find ways to earn money outside the home?
Encourage your kids to do the same.
Kids can babysit, shovel snow, bake cookies, set up a lemonade stand or sell crafts online.
In the end, different strategies will work for different families.
You get to do what works best for you!
Whether you decide to grant a regular allowance to your children or keep all your family funds together, that is fine.
Both strategies are excellent at helping you raise your children to be financially savvy and responsible in the future.
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I’m Frances Vidakovic – a mindset & action coach for quietly ambitious women who want to stop overthinking and finally take aligned action. I help women achieve their goals and follow through on what matters, without sacrificing their sanity or soul.