Pocket money wars

Posted in: Finance Last updated: 11 Feb 2014

As parents we track progress and growth in the early years through a series of milestones or checkpoints. Some are noted down for posterity and remembered fondly at family gatherings, like a first step or a first word, or other no less important but less notable like a first night slept all the way through or the end of teething troubles.

The sticky subject of pocket money

As they get older the events become less like milestones and more like inevitable rites of passage for development and growth. Events varying in scope like when is the right time for a first sleepover, or the sticky subject of when and how much pocket money to give... and whether you even give it at all?

Family Investments carried out a survey* to find out more about parents' attitudes to pocket money and pocket money habits, and what is apparent is that whilst everyone has their opinion and will choose what they feel is right for their family and their bank balance, it's a topic that doesn't seem to hold court to popular opinion.

A familiar tale when it comes to attitudes towards money though is the disparity between what we would aspire to and what we actually do – while 82% believe that it's important for children to learn to save from a young age, only a third actually give their children pocket money on a regular basis.

Research findings

Of those who do choose to give pocket money to their children – myself included – the popular reasoning tends to be that giving a set amount of pocket money to children is a good way to teach them about saving and equip them with budgeting skills to help them in their future. But are we being idealistic again and do children actually save their pocket money? According to the results: yes they do, and in encouragingly high numbers, with 84% of children surveyed who receive pocket money saving at least some of it every week.

"84 per cent of children surveyed who receive pocket money save at least some of it every week."

Encouraging children to save

Typically, children are encouraged, and then choose, to save towards big ticket items including bikes and expensive toys, and while these might not contribute directly towards longer term goals like a first car or university fees, it's a very positive step if children can show the determination to save early on.

One area where the majority are in agreement is whether pocket money should be earned or not – either through good behaviour or chores - over two thirds of parents think that children should do chores for their pocket money and 82% believe that paying children to do chores helps to prepare them for later life. Very few of the parents disagreed with getting children to do chores in exchange for pocket money. Whilst I do give my son a flat rate this can be topped up by good behaviour and doing extra chores around the house, but equally the minimum amount of pocket money received each week is not a given and can be reduced... but only in extreme circumstances!

Whatever your approach to pocket money, there's no denying that educating children early on about money management and encouraging them to save will stand them in good stead for later life.

* Survey conducted in September 2013 results compiled from 408 respondents.

Note: Whilst we take care to ensure Hub content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions. OneFamily do not provide advice so it may be worth speaking to an independent financial advisor about your own circumstances.