Should they do chores in return? What’s the best way to give it to them? How much pocket money do their friends get?
Here are four of the big pocket money questions answered, with tips and suggestions on how parents can help their children learn the most from the experience.
Pocket money is a wonderful thing. For kids it means the chance to earn money and save for something special. It’s also a key first moment in their independence: ‘this is for me and I can spend it on something I really want’. For parents it’s the opportunity to share important financial lessons about managing your money and looking to the future – and to do it while watching their kids’ faces light up with excitement. Few wins are that satisfying.
But there are always questions: how much, when, why, at what age… At Pigzbe we’re uniquely involved in the world of pocket money and its future as we increasingly embrace digital currencies and economies. So here are some tips we’ve gathered from a range of surveys, studies and research on the state of pocket money in the UK today.
1) How much pocket money should I give my kids?
There are numerous surveys each year, everyone from banks such as Halifax to newspapers and magazines like The Sun and Tatler have attempted to supply an answer. Not surprisingly, their findings vary… But average them out and you’ll find kids around six generally receive £3 a week rising to £4 or £5 as they hit 10 and above. There are no wrong answers – what’s right for you is what’s right for you – but if you feel comfortable with those figures, we don’t think your kids will be too far away from what their friends are getting. Those are also amounts sizeable enough for kids to take seriously, and to be able to have some proper, early conversations with them about saving, the importance of money, and the realities of earning it. So we reckon that’s a good place to start.
Halifax, which has monitored this more closely than most (since 1987), reckons pocket money currently peaks at an average of £7 a week for kids in their mid-teens, but will vary around the country. (Greater London will be £8, for example; the South and Southeast closer to £6).
2) At what age should I start giving it?
After how much pocket money to give, the next big question is when to start giving it. Research indicates children are wise to the significance of money by the age of 6, and already developing good or bad habits around it. One test you could try is to see if they can tell the difference between various coins, and how well they understand their comparative values. If they can, that’s a good sign their financial understanding is growing enough to appreciate pocket money and what it can do for them.
It’s common for younger kids to get smaller, irregular sums before that age and you could make a point of watching their response to that. If you spot them starting to collect those small bits of money and adding them together, that’s an indication they’re ready for a conversation about saving, and it could be time to think about regular pocket money.
Of course, if you’re looking for a digital introduction to money that’s specifically designed to help children aged 6+ in a cashless world, Pigzbe could be the solution for you.
3) Should I expect my kids to work for their allowance and what’s the best way of doing that?
This is one of the toughest questions for parents. According to the Halifax report, just over a quarter of children receive pocket money in return for chores. Some parents give an allowance with no expectation of work, others insist it’s chores or nothing.
You might consider blending the two – a recurring ‘salary’ plus the ability to make a little more for doing specific tasks.
- By encouraging your kids to earn their pocket money you’ll be giving them a clearer understanding of the realities of money, and that it comes from having a job and working. Use it to show that effort is both recognised and rewarded.
- See it as an opportunity to share important lessons about communal responsibility, eg, tidying up our rooms is something we all do in this family without getting paid for it, but washing the car is different.
- Try linking pocket money to certain chores and identifying their value – £2 for this, £4 for that – so kids learn that with greater effort comes greater reward.
4) What’s the best way to give pocket money?
Today, it’s mostly doled out as cash, with surveys saying just over 80% of children receive it that way. Interestingly, a BBC report recently asked if that was such a good idea. Considering the global shift towards digital payments, it questioned if today’s youngsters will be “learning about money using currency that is close to obsolete”. After all, last year debit card payments overtook cash payments in the UK for the first time. By 2025 they’re predicted to be nearly four times as high. So, while cash is (just about) king at the moment, that’s changing, and possibly very quickly.
If you want to read more about where we see pocket money going in the future (and how to make it easier, smarter and digital) you can go here.
Why not make an event of handing the money out, perhaps at the end of the week? If you make money important – not just something dumped on their bedside table – they’ll take it more seriously.
And it’s always good to discuss with your children why they are getting the amount they are and what it represents. This is especially important with younger children who may not know if £2 equals one toy or the whole shop.
5) How can I use pocket money to teach my kids about finance?
It’s not just about how much pocket money to give, but how best to use it. Try sitting down with them to discuss what they want to do with that money: what to spend, what to save. If that saving instinct is important to you, consider reinforcing it with a top-up. ‘If you’ve managed to save £10 in two weeks, I’ll give you another pound.’ It’s a comprehensible way into the theory of interest.
When your children do something unprompted or really well, consider giving them a bonus as a way of demonstrating that extra effort does get noticed.
And after all these ‘dos’ we have a couple of ‘don’ts’ to ponder over…
Think carefully about whether or not you want to reward good behaviour. Some parents see it as a way of reinforcing positive attitudes, but others argue that politeness, manners or kindness should be givens that are divorced from reward in a child’s development. But as we said at the start, what’s right for you is what’s right for you.
Also, is the removal of pocket money as a punishment – however tempting – sending the right message about honouring debts? If a child completes all their chores, but loses the corresponding pocket money for some unconnected misdemeanour, what signal does that send out? You had an agreement to pay them for work done, and they did it, but you broke that agreement for another reason. How would you feel if your boss did the same with your salary?
In conclusion, kids are getting more pocket money than ever, but finance isn’t getting any simpler. Handing out random amounts of cash is increasingly looking like an outdated way of preparing our children for their futures. But if you can link pocket money to effort, reward and include a taster of digital and app-based currencies along the way, you can boost their financial intelligence and set them on a steadier road to financial security.
If you’d like to know a little more about pocket money in a digital world, and pick up some tips and tricks from the experts, check out our new pocket money guide for parents.
So where next? Digital pocket money is the future
Using Pigzbe as a central hub for pocket money is a great solution for all kids over 6. It can teach them all the right values of achievement, reward and saving, while prepping them for a new and fast-moving age of digital money.
If you want to find out how the Pigzbe, part kids pocket money app part digital piggy bank can help parents, children, relatives and friends take a smarter and fun route to digital pocket money, take a look here.