Things to think about when setting children’s pocket money

Most children live with their parents til they reach majority (or older). I did not – I went to boarding school from the age of 10.  I think that’s a large reason why I’m financially responsible (and independent) now.

I’d like to share my experiences and hope it’ll give another way that parents can look at teaching their children about money, budgeting and priorities.

Set a time based budget

My father gave me a cheque every term for the term’s expenses.  I knew how long a term was (at 10, you can read a calendar!) This was ‘walking around money’ – money for movies, snacks, outings like ice skating, but also gifts for friends and family.    My meals were provided from the school, which including morning and afternoon tea.  But that’s no soft drink or chocolate bars!  When I started, at age 10 in 1995, I was given $100 a term.  It worked out to about $10 a week.  The reason I think this works well, is it gives you a good window to look at what you want to do, and what you’ll have to spend.  If I’d started with a weekly or fortnightly ‘pay’ or pocket money, I might have spent it all each period, knowing more was coming soon. A term is a longer amount of time to forecast for, and teaches discipline quickly!

Set boundaries

Know what’s included and what’s not. My pocket money did not (generally) include any toliteries – those were refreshed in the holidays.  Clothing wasn’t included in this amount either – I do like how 71 toes does it – the children contribute a percentage of clothing purchases, which I think is fair and a good way to slowly transition to full ownership of this cost (that link’ll teach you all about their system too).  I also could ‘charge back’ any expenses at the school’s clothing shop, and any medical appointments or taxis (to the airport or medical appointments) were all on an account that my father settled with my fees.

source: parenting.kidspot.com.au
source: parenting.kidspot.com.au
source: parenting.kidspot.com.au
source: parenting.kidspot.com.au

Tracking

To withdraw money, we had to go to the office (at set times, as I recall), and ask for the amount we wanted.  We then had to find out ledger sheet, and subtract the amount from our total.  It was great maths practice, but also gave us an idea of how much left.

Ownership

By signing over a lump sum to your child allows them to ‘own’ some money, but also some responsibility.  Try not to cave into paying for things that should come out of the child’s budget.  I don’t think it hurts for kids to have to pay for their ice cream or their pop corn at the movies (heartless parent I’m going to be!)  A few ‘ouch’ moments teach more than someone swooping in and solving it!

The system above worked for a number of years, when I didn’t have access to an ATM for a bank deposited amount. When we were allowed more freedom as boarders, Dad moved away from the school based cheque system, and went to putting money in my bank account every time he got paid.  As I’d learnt to manage a lump sum, it wasn’t much of a stretch to adjust to a fortnight pay schedule and ‘save’ for the future.

What are your thoughts and the pocket money systems you use/used (or had used on you)?

19 Replies to “Things to think about when setting children’s pocket money”

  1. Sarah, you had a very smart father. I gave my boys a monthly allowance from the time they were a year and a half on. That young they got $5 a month, but it grew to $10 a week so $40-50 a month depending on the number of weeks to the month. I started them very little to make decisions for themselves. I would help them with adding tax on to the item they wanted and figuring how much they would have left. I asked them if the item(s) were worth trading their money for. By the time they started school they could figure their own tax and know what would be left. My oldest always spent his money quickly but my youngest always held his money till the net allowance was paid to him before spending any of it. Their personalities have remained basically the same. My oldest I would say money burns a hole in his pocket before it even gets there. My youngest still has a long-term view always saving

    I also think it's important to allow children, from very young to learn to make decisions in all aspects of their lives to have practice before they are older. For a young child it might be as simple as one or two cookies, but as they get older having options and being responsible for the outcomes is a valuable learning tool too few children get and it shows when they are older. I think that's why a lot "go crazy" when they get their first taste of freedom when entering college around here.

    1. It's so interesting to hear about how you managed the boys money, and despite doing the same thing, them growing their own money personalities! I definitely went crazy when I first grocery shopped for myself – so much rubbish and no idea what to buy to make a 'real meal'!! Same same but different.

  2. This is a fantastic post, Sarah! Thank you. I’ve never heard of a system like this. It would fit in perfectly with what our Mr 9 has done at school with “Earn and Learn.” I especially like the fact of withdrawing the money physically from someone and keeping a ledger. Mr 9 currently gets $2 per week pocket money, which he mostly saves for term breaks. It would be good to give him more but then not buy him treats from our funds…more responsibility!

    1. I'm glad you enjoyed it Fiona – I'm certainly not ready to raise kids, but I do realise that boarding schools have great, scalable system, which must work well in some respects! It's tough if (like my mother) you always give into the whine factor, or supermarket treats – I bet it's a hard thing to be tough on. It's so easy for boarding mistresses in offices, far away from lollies and shiny toys!!

  3. This is great Sarah. I had much the same system when I moved out of home for school when I was 14. I had a weekly income, and dad set up a budget for me that I had to fill in every time I spent money so I could track expenses and be accountable to him for what I was spending.
    I still have a detailed budget. My kids get very limited pocket money, which has encouraged my two oldest to get part time jobs. The oldest is responsible for all his expenses, the others all have a clothes budget which I provide, and if they want to exceed it they pay the extra. They pay for all their treats (movies, lollies etc), but we sometimes buy treats on family outings because we are softies!
    I really want the kids to be able to be responsible with money, because it makes life so much better to be able to live within your means, no matter how much you have.

    1. Why were you out of home at 14 – was it also boarding school? I don't recall getting as nitty gritty as tracking expenses, but I can't clearly recall, we might have had to write the 'why' for the money!! Interestingly, I now don't have a detailed budget – I plan savings and pay them first and then it trickles down. I set a weekly cash amount, and there's always 'excess' in the account for when I go over. Though, I'm never in consumer debt, so something must be working!! Being a softie is ok – if you weren't you'd probably dislike yourself more!!

  4. I wasn't at boarding school, but I lived with family friends while my parents worked overseas. Well done for being good with money. It doesn't matter how you do it as long as you are in the black!

    1. OH that's cool – provided the family friends were as good or better than your parents. Probably a great way to go,without the huge expense of living on campus (Dad's work paid for that!)

  5. I think it's a good idea to let kids make decisions (even bad ones) with their own money. My parents waited a bit longer, but when we were about 15 they started giving us an allowance that covered most things – clothes, movies, books, snacks, buying our lunches etc. It made us think about what we wanted to spend our money on and it's about the time I started shopping in op shops for my clothes 🙂

    1. I started op shopping at about 17, when a friend got into it, and I was jealous at the hauls of clothes she had. My fascination with op shops didn't last, but helped my transition from school to uni – so at least I was dressed :p Bad decisions with money in childhood are perfect – the risks are so low. If you spend all your money on lollies, mum still makes dinner. Or if you spend it all on a movie ticket, you still have school and somewhere to live and all that. So it's a great introduction in a safe environment!

  6. I got tired of Link wheedling for trinkets at age 4 and started a weekly allowance of $3.50 which, at that time, bought either a key chain or a booster pack of Pokemon cards! At age 12 (junior high school), it went to a monthly amount. I bought extra / paid extra if Link was on a family vacation or family excursion, or if I had made a "requirement" that Link attend something (like a cousin's wedding). Link would usually keep a list throughout the month of things to purchase the next month, such as "ticket to anime convention" or "4 Copic Sketch markers." The money would be gone soon after it was issued, but I was always pleasantly surprised that there was no whining for the rest of the month! I would also say that, like with Lois's kids, the pattern hasn't changed in adulthood!

    1. Wow that is mature – not to whine when the money ran out. Did you find it hard to see the choices she made with her money (if they were contrary to how you might see an allowance spent), or was it all ok by you? I think, at the end of the day, money is all about planning, than anything else. Balancing incoming with outgoing (and the things you want!)

      1. Link spent a lot on fabric and notions and made outrageous costumes, er, clothing, that would be worn to school. I didn't always approve but as long as it provided enough coverage, I let it be. I was always happy there were no underage tattoos (although there was a self-funded lip piercing!)

        1. OH wow – yeah my mother put the fear of God in us re: tattoos, and piercings. Dad had to fight to get my ears pierced before 18 (for my school formal/prom). I can imagine there'd have been some amazing outfits, I hope there's some photo evidence to look back on when she's your age!

  7. I do like the idea of starting young with kids and gradually giving more responsibility. I never received an allowance as a kid because we didn't have the money for it, but my parents would include me in the shopping process. My parents would take us to a thrift shop for example, and tell me I needed long sleeve shirts and I had $2 to spend. Then they'd help me look or offer some guidance, but they usually let me have the final decision (unless I was picking out bathing suits or something ridiculous). I think it made me very careful with my money and my siblings are the same way.

    1. I think your parents still achieved similar responsibility and results with their method – which is great. I think money is a tool, but if you're careful with it, it does so much more for you than if you're careless!

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