New research shows how the “pocket money economy” is a thriving part of family life, with more than three-quarters of parents giving their children a regular allowance, according to a survey by Santander.
Many also pay their brood more on top, according to the poll, which quizzed parents as well as children aged five to 15. Nearly a third pay their children to complete household chores, while 18 per cent reward good behaviour at school.
But handouts can also be reversed in the form of “fines” for uncompleted chores or bad behaviour at school.
For parents, the pocket money economy is a great way to give their children an early taste of what it’s like to earn, spend and save their own cash. Here are top tips from Money Advice Service on how it should be done.
Give them responsibility
Things like pocket money – or even just giving children responsibility for some money you already spend, for example on treats – will help them in later life when it comes to handling money. How much they get isn’t important; what matters is that they can practise with their own money on a regular basis.
It’s never too young to start
The MAS’s research found that money habits begin to develop before the age of seven, so starting early really is better. Why not get your child to check your bank balance the next time you go to the cashpoint? It’s also never too late to start. There are plenty of things you can do to help older children and teenagers learn about money, including saving for long-term goals, such as a car, or giving them responsibility for phone credit.
This is your opportunity to help your children develop positive, beneficial habits. Every parent can do little things to help their children, even if you aren’t the best with money.
Subtly integrate money into your child’s life
You don’t have to have a formal discussion about finances to bring up the idea of good money management. Money is a very practical subject and children can be very hands-on learners. Find ways for your children to handle and use money whenever possible. With younger children, role-play is a good idea – for example “playing shop” using pretend money. When you go shopping for example, encourage your child to make a choice between two items so they understand they can’t “have it all”, or explain to them that while two products are very similar, one is cheaper and it can be sensible to go for that one.
It’s OK to make mistakes
Ultimately, it’s how we all learn from our mistakes that counts. It’s far better for children to make mistakes with smaller consequences than face bigger money issues when they are older. Talk to them about the choices they’ve made and what they’ve learned, and how that might change choices they make in the future.
For more advice on teaching your children about money, search moneyadviceservice.org.uk