Deciding when to start giving pocket money to children, and discerning how much pocket money is appropriate, are pivotal questions you may face as a parent. Commonly known in the UK as ‘pocket money’, and as ‘allowance’ in the US, this practice serves not simply as a way for children to afford their little luxuries but as a foundation for vital money management skills.
In the UK, the average pocket money for kids aged 8-15 is £7.60 per week, influencing their cognitive and social development. As crucial as the amount, is the conversation around it, fostering trust and teaching children about saving and spending judiciously.
In this article, we’ll delve into various factors to consider, such as your child’s age, family’s financial situation, and how these shape the amount of pocket money for children. Further, we’ll examine how old your child should be to start receiving pocket money, how to use it as a tool for financial education, and explore modern methods of dispensing pocket money.
Join us as we explore the best practices for introducing your little ones to the world of finance, ensuring you’re equipped to determine ‘how much pocket money’ to give in a way that supports their growth and independence.
The Average Pocket Money in the UK
Navigating through the norms of pocket money in the UK can often leave you pondering “How much pocket money is just right for my child?” Your curiosities are valid, especially given that the average weekly pocket money for children here hovers around £7.54. This benchmark, however, isn’t set in stone, and obviously, it’s been calculated based on amounts given to kids from 6 to 18 years old.
As little ones grow older, the average sum they receive sees a shift—with six-year-olds typically pocketing about £3.94 a week, stretching up to £12.75 for those in their sweet sixteens. In essence, figuring out how much pocket money to give is a balancing act that changes with your child’s age.
The ways in which children can bolster their pocket money have also evolved. Beyond the set weekly amount, undertaking household chores, such as gardening or vacuuming, can help them earn extra cash. Interestingly, more intellectual tasks like reading, excelling in school, or simply exemplifying good behaviour are becoming additional avenues for kids to increase their pocket money stash. This not only rewards them for positive actions but subtly instils the value of money and work ethic from a tender age.
While there’s no statutory obligation for parents to provide pocket money, observing the myriad approaches, including inconsistent routines and spontaneous generosity, could help you tailor a pocket money strategy that’s perfect for your child. Moreover, keep an eye out for entrepreneurial spirited youths who are proving that side hustles aren’t just for adults, securing themselves a steady income and perhaps, a head start in the financial game.
Factors Influencing Pocket Money Amount
When it comes to deciding the amount of pocket money to gift to your blossoming savers, several variables come into play, painting a diverse picture of financial gifting across the UK.
As you navigate this path, keep in mind that the dynamics of your unique household will significantly shape your decision.
- Family Affordability: First and foremost, your family’s financial health is key. It’s vital to consider what is feasible within the confines of your budget, ensuring that the amount you decide on is sustainable over time. Perhaps set a family meeting to discuss and review your budget, transparently showing how much can be set aside for pocket money.
- Number of Children: If you have multiple kids, the stipend each receives may need to be balanced to maintain fairness. Younger children might not require as much as older ones, yet you’ll want to avoid noticeable disparities that could sow discord.
- Age-appropriate Amounts: As children grow, so does their understanding of the value of money. A six-year-old might be content with £4 or £5 per week, but a 14-year-old will likely have greater needs and hence a greater allowance—potentially around £10 or £12. The pocket money for children should grow with them, reflecting increasing responsibilities and needs. Including your little ones in these financial discussions can provide them with a sense of agency and understanding.
Mapping out the connections between earning and learning is also pivotal. If your child contributes to household chores, this can be an excellent opportunity to link pocket money to work, underlining the relationship between effort and reward. Remember that chores not only teach responsibility but can double up as a foundation for understanding that money is earned, and not simply awarded.
The frequency of payments might be weekly for younger ones, to keep the concept of budgeting more immediate and graspable, while for teenagers, a monthly remittance might better prepare them for the realities of regular income and extended budgeting.
Innovations such as pocket money cards and apps have risen in popularity, allowing for safer transactions and digital savviness at an early age. Pocket money for kids no longer just means a jingling of coins but a swipe of a secure card or a click on an app, leading to an understanding of online finances and spend tracking.
Look at pocket money as not just currency, but a learning tool that cultivates a robust saving habit. This sets a solid ground for your children to understand investment and the importance of saving for their aspirations, whether it be a new bike, video game, or holiday fund. By considering these factors, you’ll be well-placed to determine how much pocket money is right for your child, keeping in mind that open dialogue and age-appropriate contexts will help them make the most of their personal finances.
What Age Should You Start Giving Pocket Money to Children?
Determining the right time to introduce pocket money for children can feel like a balancing act. In the UK context, parents often begin this financial journey when their children reach around 6 years old. But it’s essential to tune into your child’s capacity to grasp key financial concepts.
Research underscores that money habits start forming by the tender age of 7, making early years pivotal for financial guidance. Even preschoolers at 4 or 5 can grasp the rudiments of money management, such as recognising coins and understanding the exchange process for goods.
Here’s what to consider to ensure you’re fostering fiscal savvy from the get-go:
- Understanding Value: Observe if your child can comprehend the value of different coins and notes. Do they recognise that items cost money, and that money can run out? When your little one begins to show an awareness of these fundamentals, it’s a green light to start their pocket money journey.
- Earning and Saving: It’s not just about how old to start giving pocket money but also teaching them what to do with it. Encouraging children to save for specific goals can spark a savings habit early. Try using labelled money boxes for different purposes such as ‘Savings,’ ‘Spend,’ and ‘Share,’ mirroring your own saving behaviours to set a practical example.
- A Lesson in Earnings: While some parents prefer giving pocket money with no strings attached, around 44% of UK parents surveyed by Halifax believe that linking pocket money to household chores solidifies the concept that money is earned. Determine if incentivising chores aligns with your parenting philosophy and if it’s suitable for your child’s age.
It’s also worth noting the expert insight from Dr. Heather Branigan from Aberdeen University, who acknowledges that simple actions like counting out coins can have cognitive benefits for children.
Remember, pocket money for kids is more than just the cash in their piggy bank—it’s a building block for future financial literacy and responsible spending. Whether your child starts at 6 with traditional coins or at 10 with an app, it’s your guidance that will truly make a difference in their financial education.
Pocket Money and Financial Education
Embracing pocket money as a tangible teaching device in your child’s financial education can set the groundwork for their future economic understanding and proficiency. By introducing pocket money, you’re not just handing over cash; you’re steering your child towards fiscal literacy, enabling them to make smart financial decisions from a young age.
Here are some engaging strategies for using pocket money as a cornerstone for financial education:
- Creating a Budget: Turn the weekly pocket money ritual into a mini-budgeting exercise. Encourage your child to divide their allowance into spending, saving, and sharing. This could be done physically with jars or digitally through apps designed for children’s budgeting. As they allocate their pocket money, they learn to prioritize and manage funds wisely.
- Understanding Earnings: A key part of financial education is comprehending the value of work. You may consider linking pocket money to household tasks, thereby reinforcing the concept that money needs to be earned. Establish a clear list of chores with corresponding payment rates, turning a simple allowance system into a dynamic financial lesson.
- Savings and Goals: Encourage your child to set savings goals, both short-term and long-term, to cultivate the habit of delayed gratification. It helps if you introduce tangible goals they can visualize, such as saving for a new toy or a trip. Explain how regularly setting aside a portion of their pocket money can help realize these targets, boosting their saving confidence.
- Spending Wisely: Engage your child in discussions about smart spending with their pocket money for kids. Teach them to weigh the pros and cons of each purchase, distinguishing between wants and needs. This instils in them an early sense of financial responsibility and the notion that sometimes waiting or choosing an alternative can be beneficial.
- Safe and Fun Learning: Financial education can be enjoyable, too. With playful activities and games focusing on money, you can make learning about finances a time of connection and creativity. For instance, use a family board game night to discuss budgeting or simulate shopping experiences where they can handle money.
Remember, while considering how much pocket money to give and how old your child should be to receive it, the overarching aim of pocket money should always be as a means for education and growth. It’s about nurturing money-savvy habits early on so that when the day comes for them to manage their first wages, they are fully prepared to step into the financial world with confidence and knowledge.
Modern Methods of Giving Pocket Money
Transitioning into the digital age, the realm of pocket money has undergone a significant transformation. No longer limited to the traditional handing over of coins and notes, modern methods have embraced digital payment services, making the process of giving pocket money for kids seamless and more in line with today’s cashless society.
Innovative platforms such as GoHenry, Rooster Money, and Revolut <18 have emerged, offering contactless prepaid cards specifically targeted for children aged six and above. These services are not just a means of transaction but come with an integrated app designed for you, the parent, to monitor spending, set rules, and even establish pots or saving goals for your child. They’re a smart choice when considering how much pocket money to give, as they offer structured oversight of how the money is being used.
While the convenience of these services is clear, bear in mind that many come with a price tag in the form of monthly or annual fees. However, free trial periods are often available to test the waters before committing.
Typical Digital Pocket Money Services:
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- GoHenry: Charges a subscription fee with a customisable prepaid card and app
- Rooster Money: Allows tracking of savings and spending, with premium features at a cost
- Revolut <18: Provides a prepaid card and app with features tailored for young users
- Osper, nimbl, HyperJar: Offer similar services with varying features and fees
For older children, particularly those aged 11 or above, you might consider a children’s bank account provided by high street banks. These accounts generally come without monthly fees and provide a real bank account experience. However, it’s worth noting that they may offer less parental oversight compared to dedicated pocket money apps and cards.
The frequency of pocket money has also seen shifts, with the traditional weekly allowance making way for more sporadic payments. Some parents prefer to give pocket money for children as a reward for chores, with amounts varying from 64p for helping in the garden to £2.46 for cleaning the car. GoHenry, for example, advises parents on average rates for daily or weekly tasks, blending pocket money management with domestic responsibility.
Teenagers are increasingly taking their financial autonomy a step further, engaging in side hustles ranging from online endeavors to entrepreneurial ventures, frequently netting £20 or more per task. Such efforts not only supplement their pocket money but also instil a strong sense of entrepreneurship and the value of money earned through hard work.
An example of comprehensive digital banking available is with services like Starling Bank’s “Starling Kite,” a feature catering to the younger demographic with a debit card that gives the user a taste of financial independence but still under the watchful eye of a controlling adult through the app. This service includes real-time notifications on spending and the ability to lock and unlock the card as needed, further enhancing the security aspect of modern pocket money giving.
With such diverse options available, the pros of adopting modern methods are evident. These methods provide your child with valuable lessons on responsible spending and smart financial management, all within a safe and controllable ecosystem, thus answering both how much pocket money to give and how old your child should be when integrating these advanced tools into their financial learning journey.
Conclusion
In conclusion, the journey of determining the appropriate pocket money for children strikes a crucial balance between financial education and practical affordability. We have explored how age, family dynamics, and the evolving digital landscape influence not just the amount, but the manner in which pocket money is dispensed. By embracing a strategy that encourages saving, responsible spending, and the merits of earning, parents can lay a solid foundation for their children’s financial literacy and independence.
As we consider the implications of these discussions, it is clear that pocket money plays a significant role in shaping a child’s economic understanding and attitudes towards money. It is more than just a weekly allowance; it is an educational tool that prepares them for a future of sound financial decisions. Therefore, while pocket money practices vary from family to family, the pivotal takeaways highlight the importance of communication, tailored approaches, and the embracement of technology—all of which contribute meaningfully to the financial nurturing of the next generation.
