Pocket Money: Is It Important?

Pocket money

Whether you’re a parent, grandparent, carer or you‘re just generally active in a child’s life, you might have heard that ‘financial education’ is going to be taught to children at school. If you haven’t heard about this, then you can find out more by reading our previous blog post.

But in essence, children are now back in school and there’s a new topic on the agenda, and that topic is money! That’s right, children will be learning all about money and finances – that includes how to spend, save and make financial calculations.

Because of this, there’s a good chance they’re going to be much more interested in spending money too, meaning they might need some of their own! And the likelihood is that you’ll need to get much more involved in helping them learn about this newfound knowledge, whether that’s by giving them a little extra ‘pocket money’ or by teaching them the basics about spending and saving.

Whilst you might think it’s great that the schools will be teaching the children about this, you’d be forgiven for having a few questions running through your mind such as:

  1. Will they want to start receiving ‘pocket money’ off me?
  2. How much pocket money should I give them?
  3. What’s the best way to help them learn about money?

You’d be pleased to hear that whilst they might ask for more pocket money – it doesn’t necessarily mean you need to spend more on them, and there are lots of resources out there to make the learning process both easier and more enjoyable for you and the child!

Carry on reading, and find out why we think there is nothing to worry about!

Will children want more pocket money off me?

The fact of the matter is that children will probably always want something that costs money, whether it’s a new toy, a pair of football boots or the latest fad such as ‘loom bands’, but that doesn’t mean you’ll actually need to spend more money to keep them happy.

In fact, if you teach them about money and let them make their own decisions about what they spend, you might end up spending less! This is because by giving them their own pocket money, you are actively capping the amount they can spend each week on treats for themselves and they will eventually learn how to budget their own spending.

There could also be a lot less crying if you tell them ‘no’ when they ask for ‘the toy they’ve wanted all their life’, because you can simply encourage them to save up for it with their pocket money!

That way you’re teaching them that if they want something, they might have to wait for it, and sacrifice other things to get it – and a bonus is that you will no longer be tempted to just buy them what they want out of your own budget.

How much do I give them?

This is a tricky one, but it really does depend on what you can afford, as well as what you personally feel is appropriate.

A survey in 2009 suggested that the average child received £6.13 a week. However, this may have increased by now, and older children might need more than the younger ones too! As a rule of thumb, people in our office said that teenagers are given around £10 a week, whilst the younger children should need no more than £5 a week.

What’s the best way top help them learn about money?

Pocket money is a great way to teach your children about finances and there are tons of fantastic resources out there that you can use to make their learning easier and more enjoyable.

As a parent, grandparent or carer, you can help the child in your life learn about money by doing lots of things that give them the responsibility of not only spending their own money, but earning it too!

Here are a few ideas and resources that we believe will help you along the way to teaching a child everything they need to know about money:

Earn it, save it, spend (some of) it

Earn it

When you are first teaching a young child about money, you need to teach them two things:

  1. You need money to buy the things you want
  2. You have to earn money

One of the benefits from pocket money is that you can turn it into a reward for the children. For example, you could say that order to receive their pocket money, they have to perform tasks such as tidying their room, washing the pots and even things like doing their homework early.

To make it a bit more fun, and at the same help them to keep up to date with their chores, you could put together a ‘wall chart’ with a list of things they need to do each day in order to earn their pocket money. You can make this yourself, or you can go online and download an interactive one. For example Rooster Bank share lots of great resources for teaching children about money, and they even offer an interactive, printable wall chart!

Save it

Once your child has earned themselves some pocket money, they will be well on their way to spending it on the things they want. But don’t forget to teach them about the importance of saving!

There are lots of things you can teach them about spending and saving, and the most important thing is that you can’t always have everything you want, as some things cost more than others. You can also teach them that you may have to save up to get the thing you want, whilst sacrificing other things so you can get it quicker.

There are some great ways you can help them save, which range from using another wall chart and even downloading a mobile phone app! The ‘Rooster Bank’ mobile phone app is a great way to help you and your child keep track of how much money they have earned, spent and saved. It’s completely free, and incredibly easy to use.

The App keeps a record of the child’s current balance via a ‘virtual’ pocket money ledger and you can make credits or debits when you are out at the shops and they want to buy something. Furthermore, you can store pictures of things your children want to save up for, like books and toys, and you can track their progress over time. Your children can also stay in touch by logging into their own accounts and start to learn a bit about money through the educational games on the website. You can download the app by clicking here.

Spend (some of) it

This is the fun part for the child as they can buy some of the things they want, and they’ll really start learning the value of money.

The Rooster Bank mobile phone app is great for this too, as you can set saving and spending goals with the child, whilst you can also buy things direct from the Rooster Bank store. Hopefully, by spending their own money on the things they want, the child will appreciate their purchases more, whilst they’ll also learn that you sometimes have to make sacrifices to save up for the things you really want, rather than buying things as soon as they get the money.

It’s also important that when spending their money, the child is taught about the value of saving each month. So instead of spending all of their pocket money, or saving to buy something bigger, they should learn that it’s always a good idea to have a bit of a reserve in case something comes along that they really want. This will help to teach them a valuable lesson for adult life that unexpected costs come along, so it’s always a good idea to have a bit of an emergency fund/nest egg.

Do you have anything else to add?

We hope our tips on pocket money were helpful, and if you have any more tips you’d like to add for teaching children about money, then you can email us at info@shepherds.co.uk, or you can tweet us at@shepherdsFS.

Please note: All information within Your Resource Centre is correct at the time of publication, and we make every effort to keep content accurate. However sometimes information may be out of date. You should not rely on this information when making financial decisions as no financial advice has been given. The information reflects the view of the author and not that of Shepherds Friendly Society.

If you’re not sure what to do when making financial decisions then you should consult a financial adviser, who will likely charge for any advice that is given.

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