Pocket Money Etiquette - Seven do's and don'ts

The subject of pocket money can at times be a thorny one in my household! As the Mum of three boys aged 8, 12 and 14, I’m always struggling to get it right. But is there actually a right way or a wrong way to do it?

Here are seven top tips from the experts on how to give pocket money in a way which teaches your children the value of money and helps them appreciate the independence associated with having their own funds.

1 - Before you hand over any of your hard-earned dough; talk to your kids about the value of money. Lisa Davis, money and pensions writer, suggests this can happen from a very young age. She advises playing with coins and making a little shop with prices on the items with toddlers, then introducing the concept of things we want vs things we need when our children are just five or six years old. From the age of around eight, Lisa advises talking about banking and budgeting with children, so that the messages are embedded before they have their own bank account and the freedom to spend.

2 - Be honest about what you can afford to give your children in pocket money and don’t overstretch yourself. Money guru Martin Lewis reminds us on his blog, that pocket money is a vital tool in teaching children basic financial life skills, but it’s no use if it’s leaving you out of pocket (pardon the pun). Try and think about what your child needs and what it will be used for? And remember, a younger child doesn’t have to be given the same as their older siblings. In researching this article, I came across a parent who gives out pocket money according to age; so the eight year old gets £8 and the twelve year old gets £12. I actually think that’s a pretty good system (as long as the child leaves home before they’re 25 of course).

3 - Decide if pocket money will be linked to chores. Now there are differences of opinions on this. Personal finance writer Lynne Beattie says her childrens pocket money is always linked to chores, hopefully teaching her children that income is intrinsically linked to work. I have to say I agree with this in principle; it’s perhaps not as easy in practice to withhold the pocket money if the bedroom hasn’t been tidied, meaning that boundaries are unclear. Whether you decide that the pocket money is linked to chores and will be handed over on completion, or whether it sits outside of this framework and is given regardless; make your decision and make that clear to your children. This way expectations will be clear from the very start.

4 - Decide if pocket money will be linked to behaviour! Similarly to the above, different parents will have different views on this. There is definitely a danger that money being given in exchange for good behaviour could lead to materialism or a more transactional relationship with money, instead of a good healthy relationship with receiving and spending cash. Parenting author Sarah Ockwell-Smith made the point in a recent article for The Guardian, that it could also be misconstrued as paying our children to be kind, considerate or thoughtful; all character traits we would hope to develop regardless of whether there was money on offer. The removal of their pocket money for a slip-up in behaviour (which let’s face it all kids will have) might also result in anger and resentment, rather than teaching them a lesson about the behaviour itself.

5 - If you’re putting the pocket money straight onto a card, think about what controls you need to have over their spending. I learned this one the hard way, and several times over. Really until your child is 18 you need to have access to seeing where they’re spending their money in order to intervene in any negative financial patterns. You may have a child who is a naturally good saver, getting a buzz from seeing their money pile up; and while that’s great, you might need to talk to them about treating themselves to that new top they’re after, rather than coming back to ask you for it. At the other end of the scale, perhaps you’ll have a child like my eldest who would happily spend their entire weekly allowance on sweets on day one… that’s if I hadn’t set a daily spending limit on his card of course. Remember that pocket money is part of teaching them about money matters, rather than giving them free reign before that pre-frontal cortex of theirs has even developed!

6 - Be consistent in what you give them. As we all know, financial consistency helps us plan, and makes us feel more secure. It would be nightmarish to say the least if our employer ‘forgot’ to pay us one month, or gave us double one week and nothing the week after. It’s the same for ur kids. Establishing the routine, the amount, the day it will arrive, will help them to forward plan. There’s nothing to say we can’t spoil our kids and pop in a little extra on the odd occasion, if they’ve aced an exam or scored a fantastic goal for their team, but in the main try to keep pocket money the same each week.

7 - Don’t compare yourself to other parents. Again, a trap I’ve fallen into many a time. As a single parent of three, I just can’t come up with the same funds as a two parent, two-income family in our bougie middle-class suburb can. You know what they say; comparison is the thief of joy. You will only stress yourself crazy trying to match up to whatever you think everyone else is paying out. If the subject comes up with your kids, it’s a good opportunity again to talk to them about finances and help them realise the importance of us all living within our means.

A final thought from me… not a tip as much as it is an admission. The thing I find hardest about pocket money is not exerting control over what they do with the money I (or their grandparents) have given them. Many a time I’ve had to dig my nails into the heel of my hand, taking deep calming breaths while watching my child hand over £30 he's saved, for a ukelele which I know he will never learn to play. I know this because there is a recorder, a mouth organ and a tambourine, all languishing in a cupboard in silence (thankfully). But the thing about pocket money is that it’s theirs; it’s not up to us to decide what is wasted money and what isn’t, within reason. I’ll draw the line at a drum kit.