Finance is tricky enough as an adult but as a child, it is a whole new world. This is something that must be considered when trying to decide whether or not to give your child pocket money. If you do decide to give your child(ren) pocket money, the next big question is how much.
To decide if your child deserves pocket money you need to understand their level of maturity. There is no clear age where you should feel the pressure to start giving them money but studies have shown that many kids do start to receive a little bit of money at the age of 6 or 7. You should try and ask some questions to your child to understand if he/she has an understanding of how money works. “If ice cream is $1 and you pay $2, how much should you get back?” “If you lose your money, does it matter?” If children don’t have an understanding of how money works they will treat like paper and tear it up or throw it away at will.
Once you decide they are ready for some money you now have to decide how much to give. The average allowance in the US is $16 per week however this varies greatly by age. Older children have more expenses than young children and this should be reflected in the amount they receive. Some parents tackle this by giving kids $1 for every year of their age.
The final question is to decide what your child has to do to get the allowance. While you may be tempted to tie pocket money to chores, be careful. You want to instill the belief in your child that chores are the responsibility of being part of a family, not just something you are paid to do. It has been shown that the best approach is to have your child help out around the house for nothing, receive an unrelated allowance and then on occasion offer your child more money to do additional tasks. This allows your child to start learning how to manage money, time and key negotiation skills. Just don’t teach them too much too soon or they will take you to the cleaners.