Why should we give kids pocket money?

In short - to help them be great with money, now and in the future. 

Pocket money is an excellent way for kids to learn how to manage their own money. Giving your kids a little bit of financial independence at a young age can help them learn important money habits and behaviours that they'll use for the rest of their lives.

Why is this important? In Australia, the average credit card debt is $2,479¹ per card, and the average household debt is $185,000². And if you've ever been in debt, you'll understand why it's so important to do whatever it takes to change the story for our kids. 

Like it or not, it's up to us parents to teach our kids about money and help them enter the 'real world' with a solid understanding of what makes it go around.

Kids learn by doing

Kids learn by doing. When you give them the independence to manage 'their own money', they start learning how money works. And regular pocket money paid weekly or fortnightly teaches them to budget, make their money last and that Mum's plastic card doesn't have an infinite supply of money. 

Giving kids pocket money allows them to build on their financial skills by letting them make their own money decisions. They'll understand the consequences (good and bad) of their choices and will learn skills such as the power of saving, how to spend smart and how to earn and grow their money. 

See how Spriggy gives kids practical experience with money.

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So when should you start?

Well, really, it’s up to you! You can start as early as you like and use games like Monopoly to help them understand the basics of earning, spending and saving before giving them real money.

Kids already understand financial concepts from the time they're 3 years old, and most parents start giving their kids pocket money when they’re 5 or 6. But if you’re still unsure or think your kids might be ready for pocket money earlier - here are some things to consider:

See how much pocket money you should be giving your kids. 

Do they have older siblings?

If they’ve been exposed to the concept of pocket money around the house, they might have grasped the basics and be ready for it earlier.

Do they know we need money to buy things?

You can test this concept out when you’re doing a weekly shop with them. When you get to the checkout, ask if they know how we get food to the car without the security guards running after us (a good lesson on why not to steal here too!)

Do they understand the concept of saving to buy more expensive things?

You can test this by playing some games with them, like Monopoly! It’s fun and helps start them out on those all-important financial literacy skills.

Ask these 5 questions to help your kids learn to budget.

Do they get that if they spend all of their money at once, there won’t be any more until the next payday?

Structure their pocket money payments so they understand how much and how often they can spend. If they blow it all at once, it’s gone! Let them make these mistakes too, it’s a valuable lesson.

Do they know that money doesn’t grow on trees?!

Of course, we all wish it did. And kids tend to think that money just miraculously appears especially in today’s cashless world. But it’s important they understand that we don’t have an endless supply in our bank accounts. Ask them simple questions about money and if they’re not too sure, here’s an opportunity for you to teach them.

As soon as your child understands the basic concepts of money, they are ready to start looking after a little bit of their own.

“It’s never too late to start, but there’s definitely a good reason to start early! I was playing with Barbies and had no idea about value exchange at 7 years old. My son, on the other hand, was selling loom bands and making a tidy profit at 7 years old!”
Lisa Wilson, Financial Expert and Mum

Get your kids started with pocket money in minutes.

When you do decide to start giving them pocket money, it’s important to have a structure. So they understand how much they’re getting and when they’ll get it. Consistency is key to helping them set savings goals and budgets so they can understand how money works in the real world and make their money last until their next ‘paycheck’.

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Sources:

1. Reserve Bank of Australia, "Credit and Charge Card Statistics" (December 2021) https://www.rba.gov.au/statistics/tables/xls/f12hist.xls

2. Australian Bureau of Statistics, "Household Debt and Wealth, Australia, 2019-20" (September 2021), available at https://www.abs.gov.au/statistics/economy/finance/household-debt-and-wealth-australia/latest-release

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