The purpose of pocket money is to teach children the value of money and how to make smart decisions about purchases. So, when you introduce pocket money, if you do at all, be sure to have this as your ultimate aim and keep it in sight.
To start, think about money from an adult perspective. We use money to buy things, pay bills and save. How do we get money? Mostly from the work we do. We either sell a product or service. That is, we either have a shop and sell products like furniture, food, gifts or car parts, or we provide a service, such as being a hairdresser, accountant or psychologist. We can also earn money from investments like stocks, interest-earning accounts and property.
In the adult world, people don’t hand you money for nothing or for half-doing a job. I know children are limited in what services they can provide but try and make it as close to real life as possible. No- one pays us to make our bed or clean our teeth so don’t pay your kids for this or they’ll only do it if they get paid. Children should be expected to contribute to the household as part of a family. They need to learn to do things like set the table, tidy up the yard and vacuum their rooms without expecting anything in return, just as we do as adults.
It’s best to pay pocket money for extra jobs that aren’t daily or that you might pay someone else to do. For example, washing the car or the dog. These are elective jobs. Decide on the amount of money you think each job is worth and write it down so everyone knows. These jobs are the service jobs, where your children are required to give their time, effort and energy. Now for products...
Think of things your children could make at a high standard and that people would want to buy. Do you have extra fruit growing on a tree? What about Christmas cards, birthday cards or biscuits? Ask your children for ideas and ask family and friends if they’d like to buy some of the goods or help them arrange them for sale.
Once your child has earned their pocket money, what should they do with it? I know a family who gets their children to bank half of what they’ve earned or any money they’ve been given as gifts. Another idea is to pretend to invest their pocket money in stocks – they can keep an eye on the market and you can be the stock exchange when they sell.
There’s a whole opportunity for learning in this topic alone. Your child can see themself earning income and use the income as spending money, leaving their capital intact.
One last point – paying kids for good behaviour? Never! This is bribery, becomes expensive and only works in the short term. As a parent your main task is to prepare your child to live and work in the world as an adult, so this should be your aim when using pocket money. Evaluate your system with this question – does it prepare your kids for the real world or is it just a way of getting them to do everyday jobs around the house without nagging?