Could pocket money teach children about money?
Pocket money can be a great tool to teach children about money.
By giving children a fixed amount on a regular basis, you can help them learn how to budget and teach them good savings habits.
The benefits of early financial education
Research by the Money and Pensions Service (MaPS) shows that children start developing money management skills and behaviours between the ages of three and seven.
And our charity partner, RedSTART, takes early access to financial education very seriously.
Their Change the Game programme is teaching primary school children from disadvantaged areas about money, with the aim of building strong evidence of the positive impact of early and ongoing financial education.
Thinking about your child's long-term financial future?
Junior ISAs are a great way to put money away for your child's future.
Anyone can pay money in, and your child will be able to access it when they turn 18.
How pocket money can teach your children about money
The earlier children start learning about managing their own money, the better. Giving your child pocket money could help you to start teaching your kids these vital skills - read on to find out how.
It can help children learn about the value of money
It can be hard for young children to understand that money comes from hard work, it’s not just given out. This makes it difficult for them to see the value of money.
Having to pay for the things they want instead of asking you to buy them can help your children start to understand how money works.
Getting a fixed amount of money regularly can help them learn how to budget and manage their money, as they’ll know they can’t go to you for extra cash when they run out.
They’ll have to weigh up if the things they want are worth spending their money on.
Getting a head start on budgeting skills can also help kids learn about comparing prices, taking advantage of discounts and just how much their money can buy.
“It has made them appreciate how much things cost. It’s amazing how price-conscious they are now they have to fund non-essential stuff themselves.” - Lorraine
It helps them connect money and work
Offering extra cash in return for helping around the house can help your children start to understand that money is earned through hard work, helping them develop a good work ethic on top of money management skills.
“Both my children have the opportunity to earn extra for their money boxes by helping around the house.” - Lucy
Some parents reward their children financially for doing well at school, but it’s worth keeping in mind that there might be subjects your child naturally struggles with.
If you’d like to give your child some extra pocket money based on how they do at school, it could be a good idea to reward their efforts rather than their results - such as doing all their homework on time, studying regularly and knowing to ask for help when they don’t understand something.
It helps children develop good savings habits
Managing their own money helps children learn how much they can afford to spend straightaway and how to save for more expensive things later on.
“Giving my kids pocket money actually saved me a fortune. Instead of endless pester power, they were in control of their own budgets and started to learn the value of money: ‘wow, that’s really expensive – I’m not paying that’. And started saving too, for holidays and treats.” - Carol
How much pocket money should you give your child?
The right amount of pocket money to give your kids depends on what’s right for you and your family.
In the UK, ten-year-old children receive £3.29 a week on average in pocket money, with the amount going up to £5.05 for 14-year-olds. But these are just averages, and the right amount for your child will depend on things like what they need to spend their money on.
It’s worth considering if they’ll need to use it to buy sports equipment or pay for being a member of a club, whether they’ll buy their own clothes and pay their own phone bill out of their pocket money.
The earlier you start teaching children about money, even if it’s by giving them small amounts of money, the longer they will have to develop a strong understanding of money management and build steady habits.
If you’ve opened up a savings or investment account for your child, such as a junior ISA, you could have them choose on their birthday how much of a rise they’ll get on their pocket money compared to how much will go to their junior ISA.
They might surprise you and ask you to put more away for their future!
Helping your child get a head start on their future
Long-term saving is important as an adult. Even if your child has learned the importance of saving, it might be hard for them to fully understand the idea of saving for the long-term, where they won’t see the rewards of their hard work for a few years.
A great way to help your child learn about long-term saving while setting them up financially for adulthood is to open a children’s savings product, such as a junior ISA.
With junior ISAs, their money will be locked away until they turn 18. This means they can’t touch the money until then so there’s no temptation to spend it!
You can start putting money away for your child from the day they’re born. When they’re old enough to learn about saving, you can tell them about the account.
Take the time to go through their options of what to use the money for when they’re older, such as buying their first home or their first car. You might have an idea of how you’d like them to use it, but at the end of the day it will be their money to help them achieve their goals - whatever they might be.
Open a OneFamily Junior ISA today
With our stocks and shares Junior ISA you can start investing from just £10 a month and save up to £9,000 each year on behalf of a child. Anyone can pay in and the child will be able to withdraw the money in the account once they turn 18.
Our Junior ISA invests in stocks and shares. This means it has good long-term growth potential, but the value of your investments could go down as well as up so your child could end up with less money than you've put in.
Setting your child up for success
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What are ISAs?
Individual Savings Accounts (ISAs) are a type of tax-exempt savings accounts. There are different ISAs for different goals - find out which one is right for you.
Is it better to save or invest your money?
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