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The pocket guide to pocket money

Confused about when, how and indeed why to give your tween pocket money? We look at various approaches to introduce financial responsibility to your child.

Take a tip from one of the world’s richest men. “My dad was my greatest inspiration. What I learned at an early age from him was to have the right habits early. Savings was an important lesson he taught me.” So said one of the globe’s most financially savvy men, Warren Buffett, in a 2013 interview with CNBC.

Yet most of us are still nervous talking to our kids about cash, unsure how much or little we should be giving them, and whether we should gift it freely or make them work for their money.

Tot up your options with these simple tips.


Think kids are too young to learn about finance? Think again. Back to Mr Buffett who, when asked what he thinks is the biggest mistake parents make when teaching their kids about money, said, “Sometimes parents wait until their kids are in their teens before they start talking about managing money — when they could be starting when their kids are in preschool.”

A study from the University of Cambridge found that kids are already able to grasp basic money concepts by the age of three to four, and by seven they have the cognitive skills to understand quite a bit of financial know-how such as the importance of keeping track of spending and saving and what lending and borrowing means.

Louise Hill, founder of GoHenry, the prepaid pocket money card and app for kids aged six to 18, says: “That reinforces the idea that you need to start young, just like you do with reading or other skills, when they are able to soak up information.

“Eight to 12 is the perfect time to teach them more about money. This is when they are starting to reduce dependence on parents and starting to have a bit more freedom and make their own financial decisions.”

Try some simple exercises with younger kids. If they get pocket money or birthday cash, set them up with a two jam jars – one for saving and one for spending. Get them to put money in each with a realistic goal in mind for the saving jar. Every time your child adds money to it, help them tot up how much they’ve away, giving her the gift of patience and delayed gratification.


When it comes to teaching kids the value of money, the amount they have doesn’t matter.

Louise explains: “The average weekly amount given on gohenry is £5.80 for a nine year old, rising to £8.60 for 12 year olds. But it is not about how much you are giving your child but rather about how they are learning to handle and value any amount of money.

“It can be as little as 50p a week, but the fundamental thing is that they make choices about what to do with that money. They might spend it all at once and then not have any money left, but making mistakes is how they learn.”

The good news is that this young generation are bigger savers than their parents. According to recent gohenry research, six to 18 year olds save 13 per cent of their earnings, an average individual saving of £62 over the course of the year, or £5.15 per month - almost three times higher than the UK Household Saving Rate.


Should you ‘pay’ your child for completing tasks around the house? This is something you have to work out for yourself, depending on your own family’s values.

“Some parents feel passionately that chores are part of family life and kids should do them anyway. Others parents like the concept that children should have to do something to get their money,” says Louise. “It’s a ‘Marmite’ issue’.

A kind of hybrid system is the choice of many, where they give a ‘basic rate’ of pocket money and pay a bonus when their tween puts the washing away or tidies their bedroom.

But what to pay? According to the families who took part in gohenry’s Youth Economy report, the average pay kids get for tidying their bedroom is £1.40. Washing dishes nets them £1.05, the same as emptying the dishes. Some lucky kids clean up to the tune of 80p just for brushing their teeth!


Pass on your own clever cash thoughts by talking to your children about money and the simple financial decisions you have to make. If they’re desperate for the leading brand of tomato sauce, for example, explain that you’re buying the supermarket’s own brand instead as it costs less and, in your opinion, doesn’t taste any different.

Talk aloud about how you’re making your financial decisions as a grown-up, asking questions like, “Is this something we really, need or is it just something we fancy?” Ponder whether you could get it cheaper elsewhere or it it’s worth its price tag.

Keep talking to your kids about the many different ways to save or spend less. Can they borrow a book or film from a friend rather than buying it, or make birthday cards rather than buying them?

Like so many aspects of life with a tween, talking is essential. Staying silent on the subject of money will only reinforce the idea that it is managing your cash is some secret dark art or, worse, that it magically appears. Making money interesting, or even fun, on the other hand, will ease that financial fear.

To find out more: Visit the Money Advice Service website

Mel Hunter is a freelance journalist specialising in parenting, mental health and consumer issues. She is also mum of two tweens, a daughter aged 12 and a son aged nine, who has additional needs.

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