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26th January 2019|

The Advantages of Pocket Money – A Parent’s Guide

Article by Faith Archer

We all get a lot of bills; there’s the gas, electric, internet, phone… and then there’s the kids’ pocket money! It may just seem like another expense in the long list of regular outgoings, but there’s a number of very good reasons behind why we’ve been giving a regular amount of money to children for the past two hundred years. So let’s look at the advantages of giving pocket money!

In this post we will cover:

  1. What are the advantages of giving children pocket money?
  2. Are there any disadvantages to awarding pocket money?
  3. Giving money versus non-monetary rewards
  4. How much pocket money do parents typically give?
  5. Extra tips for parents

1. What are the advantages of giving children pocket money?

Boosting Financial Education

First and foremost, we often give pocket money so children gain a deeper understanding of financial responsibility. By giving them a regular allowance, it’s over to them to decide how money gets spent or saved. If parents put their foot down in that pocket money must cover all expenses, bar special events such as holidays or birthdays, kids can more carefully consider the value of money and how to handle the responsibility. ParentCircle have some great advice on Raising Money-Smart Children.

An Exercise In Restraint

Regular allowances aid kids in learning a key lesson on self-restraint that will help them in later life. Getting money of their own teaches them that if they spend it on one thing, they might not have enough to afford something else! The power’s in their hands to make the decisions, and knowing they’ll have to wait until the next week or to save up in the long-term may make them think twice about their needs and wants.

Reducing Parent Pestering

They have a regular flow of allowance and money to manage of their own, so won’t be pestering parents for money all the time – or at least in theory! If it can’t wait until a holiday or birthday, let them know that they’ll need to use their pocket money to pay for it and to save if they don’t have enough yet. Alternatively, you can set them additional earners outside of their allowance (see our Extra Jobs feature) as a way of making extra money. Our pocket money chores list can offer some good inspiration for age appropriate chores.

2. Are there any disadvantages to awarding pocket money?

You may want to consider if the money given to your children as pocket money will be spent frivolously. This could be increasingly risky if the money is given regardless of behaviour. If their pocket money seems to disappear with ease every time they receive it, or if they’re never saving any of their allowance away, ask about it and encourage them to be more savvy with their choices.

Similarly, if you do decide to link allowance to chores completed, if they feel they’ve got enough money and aren’t interested in earning more, they may decide it’s no longer worthwhile! We have heard a few stories like this, so it’s important to emphasise that some jobs are just part and parcel of everyday life, incentive or no incentive.

Some families may also find it difficult to keep track of how much allowance has been given, what’s been spent, saved and so on – but that’s where a mobile pocket money app like RoosterMoney can help alleviate some of those issues!

3. Giving money versus non-monetary rewards

Here at RoosterHQ we sometimes hear from families that a child with a monetary allowance has a younger sibling that isn’t quite ready for pocket money just yet, but they would like to involve them in the process of encouraging good behaviour in return for a reward. Instead of using your local currency, you could use a system such as ‘stars’ or ‘points’ to manage their allowance. If you’d like to switch to stars or another currency in the app, you can find out how here!

This is perfect if they’re a little too young to begin learning about money, but you would like to put a system in place to highlight the process of earning. It’s a great starting block before moving onto earning real pocket money!If you’re looking for other activities to help engage your children with money, check out Parents.com’s Age-by-Age Guide.

4. How much pocket money do parents typically give?

You can find out this and more via our Pocket Money Index. As an example, here are some of the recent statistics from the 2018 U.S. Kids Allowance Report:

  • 69% of parents are choosing to give a regular allowance
  • 45% of those that do award allowance give it on Saturdays
  • Parents reward children for good grades in Math more than any other subject
  • The top item to save for among children are mobile phones

5. Extra pocket money tips for parents

Consider whether you want to give pocket money regularly or, to help your kids learn that you don’t get something in return for nothing, give it as a reward for chores being completed. This could be for things they’re already doing, such as laying the table, helping with the laundry, doing the dishes and so on! This serves as an extra motivator. There’s a way to do this in the app here if you’re a PLUS user, and more information on chores and allowance in this article on pocket money chores.

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We hope the advantages above and our tidbits of advice have been useful. If you have any questions, or recommendations on tips to add please get in touch at hello@roostermoney.com

 

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