Oh these blessed days when a push-notification tells you that the salary safely landed onto your balance! We all know this feeling. And some of us remember it from our childhood, when the calendar turned Saturday and the weekly pocket money filled the savings jar — or the purse, to be spent right away.
The great Kiyosaki says that earning pocket money is essential for learning money management and even the basics of investments. However, many families don’t give any pocket money at all, and there is no research that would show that their kids do worse or better in life. You’re the captain: you decide whether to give any pocket money to your kids or not. If you decide to give, read further to learn useful hints and hacks!
When should I start giving pocket money?
Children under 4 years will hardly be able to manage their spendings due to their brain and psychic setup. Giving pocket money to children aged 5 to 15 is quite common. For kids aged 15 and older, it is vital to learn how to earn and save their funds. Teens know that money doesn’t grow on trees, so you can suggest earning it in a safe way, like washing the neighbours’ cars or cleaning their gardens.
Should I pay for house chores?
This depends entirely on your and your family’s view on these things. Some people don’t pay for chores at all, explaining that all family members must contribute to the household without any extra bonuses. This is reasonable, since external motivation tends to replace internal motivation. Kids that receive money for doing chores may feel less satisfied about the work actually been done.
Other families pay for chores, and most successful businessmen advise to do so. If you decide to take this way, mind the following steps:
- Set up fixed rewards for the chores.
- Agree on a system of task tracking. Especially if you have more than two children.
- Pay out the rewards on a certain day and do not encourage overspending.
- Do not set too high rewards. Let your children some space for bargain.
- Be open for bargaining. Teach your kids to do it in a civilized way: encourage them to find arguments for their statements and be ready to find a compromise.
A good starting point is to pay 0,5–1£ for a task. When kids grow and tasks become more complicated, you can negotiate the prices. For example, Americans pay an average of $2.21 for doing the laundry, $2.57 for vacuuming and $9.93 for gardening.
A hack: set up a list of minimum chores that need to be done during the week to get a fixed sum of money. Extra stuff goes for a bonus.
How much pocket money should I give?
Before determining the exact sum, consider the following steps:
- Set up a budget of needs and wants. Do you want your kids to pay for lunch at school from pocket money? Do you give them extra money for weekend activities? Depending on the age of your children, decide how much money they require for needs and how much you are willing to spend on wants.
- Explain your kid the basics of saving and spending. Setting up special jars for different savings is helpful to visualize the process. Agree on a certain percentage to be spend on daily little pleasures and do not give your kid extra money if she exceeds the budget.
- Be consistent. Your system of pocket money must be easy to understand and transparent. Don’t puzzle your children with sudden changes of rules.
- Never take the money back. Especially from the saving jars. What you give to your children, belongs to them, and it is up to them to decide how to deal with the money.
Finally, here are the results of Roostermoney’s research on the topic:
Cash or digital money?
In most European countries, kids can’t have a personal bank account before they reach full legal age. For children under school age, it is vital to see and touch real banknotes and coins: this helps them learn and relate to money. Counting savings will help your child develop mental math skills, despite that being a pure Scrooge McDuck pleasure. With Dzing, you won’t have any issues cashing your money. At any ATM and in any currency, wherever you are. Fresh baked banknotes, hot out of the ATM, even smell like success. 🙂
Are there any alternatives to pocket money?
There are plenty. You can reward your kids with tokens made of carton and exchange them for fun activities or purchases. You can also use a chalk board to track scores of the whole family. Or just download a mobile game that lets you plan the household chores and fight for scores. Introduce some competitive spirit and enjoy the process, not just the results!
Comment from the Dzing Team: “Although we agree that earning money is a vital skill that needs to be developed before getting the first full-time job, we do not pay our kids for house chores. We need to teach our children other important things in life: caring about each other, loving the place we live in, and enjoying keeping it clean and cozy. In our opinion, these are the primary skills that we need to develop as a family.”