Giving kids pocket money

Paying pocket money

When it comes to understanding money, it is never too early to start teaching kids about earning money, saving money and budgeting.

If you think it's right for your family, giving kids regular pocket money is a great way to develop their money skills, as well as encouraging independence, patience and goal setting.

Here are some tips about managing pocket money for children.

Why give your kids pocket money?

Children develop their habits and attitudes about money from their parents and how money is managed at home. Giving kids pocket money is a great opportunity to teach children the value of money and help them understand about saving, spending and donating.

Giving your children money can help them to make money decisions. They can choose whether to spend their money now or save it up for something bigger.

Paying pocket money is not appropriate for every family so it is up to you if you prefer to use other ways to teach your children about money.

Video: Kids pocket money advice - giving kids money for jobs

Video about teaching kids and teens about money

David and Libby Koch discuss some approaches you could take when talking to your kids about money.

This video was developed in partnership with the Koch family and Father Chris Riley's  Youth Off The Streets.

Transcript: Kids pocket money advice - giving kids money for jobs

How often should you pay kids?

Smart tip

When you pay kids pocket money use this time to chat with them about what they plan to do with their money.

The frequency of payments is entirely up to your family and will depend on what suits your family's situation.

You could start with weekly payments for younger children, and then extend to fortnightly and then monthly payments for older children and teenagers. This will help your child develop budgeting skills as they will need to manage the money over a longer period of time as they get older.

When a child gets to an age where they could start part-time work, you could consider cutting back their pocket money to encourage them to look for a job.

Paying kids for household chores

Some parents pay their kids pocket money without expecting jobs to be done to earn it, while others expect pocket money to be paid for particular jobs around the house. If you decide to pay for jobs, one of the trickiest things to work out is what jobs you should pay your children for and what jobs are 'family jobs' that are expected to be done as a contribution to the family.

Paid jobs vs family jobs

Which jobs you pay for and the ones you don't will vary from family to family. Here are some suggestions. Family jobs that you might not pay your children for could be things like setting the table for dinner, making their bed, washing up and tidying their room. Paid jobs could be tasks that a parent would otherwise have to do, like sorting washing, mowing the lawn or vacuuming the floors.

You don't get something for nothing

Pocket money could be paid to encourage a good work ethic. If you set certain chores for your kids and the chores are not completed, you could choose to not pay pocket money for those jobs or pay them less. This will reinforce the idea that you only get paid in full when you complete the job properly.

Talk to other parents

Talking to other parents can help you get an idea about what other people are doing. You can find out what jobs they pay their kids for, how much they are paying and how often they pay their kids. Getting other parents' opinions can help you work out a system that suits your family.

Video: Teaching kids to be money smart - managing money

Video about teaching kids about pocket money

David and Libby Koch provide some tips and advice about helping your children manage their money and teaching the value of earning pocket money.

This video was developed in partnership with the Koch family and Father Chris Riley's  Youth Off The Streets.

Transcript: Teaching kids to be money smart - managing money

Saving or spending pocket money

Teaching kids the value of saving money versus spending money is important. Here are a few different approaches to think about, to encourage the idea of saving some of their pocket money.

  • The 50%, 40%, 10% rule - Save 50%, spend 40% and donate 10% to your kid's favorite charity.
  • Three jars - For younger children, you could have three jars for saving, spending and donating and your children could put money into each jar. This method helps your kids understand the difference between saving and spending.
  • Budget - You could work with your child to draw up a budget and decide together how to split up the pocket money.
  • Investing - You could consider investing a small amount of your child's pocket money.

Kids' bank accounts versus piggy banks

When it comes to banking your children's money, think about the best option for your family. You could start a bank account for your child, get them put their money in a piggy bank or do a bit of both.

Bank accounts

By setting up a bank account for your child you can give them a starting point for the ideas of saving and interest from a young age. Most primary school age children can do banking through their school banking program once a week. You will usually be reminded about banking day in your school newsletter, so this can be a convenient option.

Bank accounts also give you an opportunity to go through a bank statement with your child. You can show them when the money went in, how much the balance of the account is and also what interest was paid. This will familiarise your child with these kinds of money concepts.

Piggy banks

Piggy banks are a fun way for children to start learning about money and to encourage saving. They are a good option for younger children as a savings starting point and are a more tactile experience than putting money into a bank account.

Kids can physically count the money in their piggy bank whenever they need to check the total. This will give them a great sense of achievement and help them recognise coins and notes.

Money lessons online

Try MoneySmart Teaching's digital activities to help your kids learn some important money lessons.

thumbnail-needs-and-wants

Needs and wants

(Year 2)

thumbnail-money-and-people

Money and people

(Year 3-4)

thumbnail-money-maps

Money maps

(Year 3-4)

thumbnail-fun-day-out

Fun day out

(Year 5-6)

Pocket money is a great way to introduce children to the ideas of saving, spending, budgeting and donating. Set up an approach to pocket money that makes sense to you and is practical for your family.


Related links


Last updated: 01 Dec 2016