How much pocket money should I give my child?

Most of us remember the excitement of receiving pocket money as children – the joy of filling the piggy bank and then the excitement of deciding how to spend it. However, as a parent, the idea of giving your own child pocket money can bring a new set of dilemmas and worries. Is there an appropriate age for them to start receiving pocket money? Is there a correct amount? Will they spend or save wisely?

The earlier our kids start learning good financial literacy habits, the better able they will be to develop a smart relationship with money. A study by the Money and Pensions Service (MaPS) showed that less than half (46%) of parents talk openly with their children about money. The more confident parents are about managing their own money, the more likely they are to talk to their children than those who are not confident about money (58% vs. 33%). Giving your child pocket money is the perfect opportunity to teach them good financial habits as a family. Here are some practical and helpful tips on this often controversial topic.

When is the best time to start? 

In a survey, 75% of parents stated that they first gave pocket money to their children between the ages of five and seven. Children start forming their financial habits from a young age, so as soon as the child can count and understand the concept of having a certain amount of something, then he is probably ready to receive pocket money. 

Imaginary activities that put little ones in different poses to use toy money are a good start. Then, as they grow, if you ask your child to pay for what they buy in real stores, money and the cost of things will become less of a foreign concept. Studies show that parental actions and characteristics have a far greater impact on children's long-term financial skills than any other type of financial education. Talking to little ones about money and involving them in buying essential everyday items is an essential lesson. 

How much pocket money is enough?

So how much pocket money should you give your child? Well, perhaps the most important thing to understand is that no matter how much you give him, he would always want more, so don't be swayed by comparisons to how much their friends are getting or national statistics. Factors to consider:

• How old is the child?
• What do you expect them to pay with this money?
• How much can you afford?
• Spending advice

The simple act of regularly receiving their own money and being able to decide how to spend it is vital in the process of a child becoming financially independent. Discussions, activities and thematic courses are also puzzle pieces important to build a child's financial literacy. 

*Article written by Veronica Dunga, KEN Academy trainer.