Pocket Money For Kids
When to start giving pocket money?
It is up to you to decide how old your child should be before you start giving pocket money, if you think they will understand why they are getting money, and how to use it, then that's when you should start. The usual age is around 4 or 5 years old.
How much pocket money should you give your children?
This also up to you to decide. Of course it depends on how much you can afford, but that doesn't mean you should give your child more money than the usual going rate amongst their friends just because you are better off than other families, this would not teach them any lessons about how the real world works, and won't teach them that hard work pays off.
Some parents link the amount of pocket money they pay their child to the child's age. For example if they are 6 years old, give them 6 dollars a week. As kids get older they will need more money to buy the things they want, and so this age/wage increase will work well.
You should discuss what other families are giving their children. The parents of your children's friends would be the best people to talk to; you don't want your child to be getting too little or too much more than their friends. This could lead to teasing or your child being spoilt.
Also look at what the pocket money is expected to cover. If it's only to cover the child's non-essentials, like toys or movies etc., then the amount you give will be less than what you would give if the pocket money is expected to cover other important items such as transport or school lunches.
How to pay your child pocket money?
So what should you pay your child for? Should it just be a weekly allowance that the child receives no matter what? Or should you pay per chore? Either are good options, but there is also the option to combine both.
Set a basic weekly rate, and give the child opportunities to earn more if they do certain jobs. This teaches the children that if they work they will get to have more fun with the money they earn and if they don't work hard they will barely scrape by. If you want this lesson to be learnt, set the basic allowance low compared to the pay per chore. e.g. $5 basic weekly rate, then $1 for taking the bins out, $4 for vacuuming the house, etc.
Make a list of what each chore pays, so it is clear to the child what they can do and how much money they can earn. This will also come in handy when there are disagreements over the amount of money the child gets. If the child is not happy because they didn't get much pocket money that week, simply point to the chore list and tell them why they only got that amount.
Tips and ideas
There are many types of bonuses you can give your child. You could give them a bonus for doing well in school, or bonuses for being responsible with their money. This second option could take the form of a 'Savings Bonus', kind of like what the banks offer customers for saving. You could give the child an extra $5 a month if they are trying hard to save, or even tell them that you will match every $1 they save, a 'Parent Co-Contribution' to their fund.
Let them make mistakes
Sometimes your child will blow their cash on silly things, especially in the early days of the new pocket money scheme. Instead of scolding them or not allowing them to spend on certain things, you should let them make this mistake, they will learn quickly that if they spend their money all at once, or on things they don't really need, they will not have any money to do more fun things later in the week, or to save up and buy things they really want.
The banks interest rates won't give the child much incentive to save, especially if they are young and only earning a few dollars a week. You can choose to pay interest instead of or as well as the bonuses mentioned above. If you pay it per week or month then the child will also learn that the longer they keep their money the more they will benefit. Teaching your child to save is one of the best lessons they can learn for later life
Letting your child get into debt can be both a good thing and a bad thing. The good side is that if they do get into debt, and it does not go well, they will learn a valuable lesson and hopefully never want to get into debt again. The bad side is that if it goes well for them, they might start to like the idea of getting credit and debt; this may not be the best situation for your children. Also if there's angst about debts, the children may not be very happy with you.