How much pocket money should kids be earning?

The vast majority (90%) of Good Housekeeping readers think that children should get pocket money because it can help teach them budgeting and money management skills, but the way families give pocket money can vary significantly.

A recent study by NatWest Rooster Money, a children’s prepaid debit card and pocket money app, shows that only a third (30%) of children are paid a recurring allowance. Today, regular pocket money makes up just 14% of children’s overall income, with young people often doing additional paid-for household jobs or being rewarded for good behaviour or completing schoolwork.

With many different approaches to pocket money to choose from, working out the finer details and ground rules in your own family (if you choose to give pocket money at all) isn’t always straightforward. Is it better to give a regular sum or to pay children per task completed? What’s the going rate for pocket money? And at what age should you start giving it? Here’s what the experts advise…

Choosing the right amount

Both the NatWest Rooster Money study and recent research by GoHenry (another prepaid card and app for kids) show the average amount of pocket money children receive varies by age, and – as you might expect – increases as children get older. This starts at £2.75 a week for six-year-olds and rises to £6.89 for 16-year-olds using NatWestRooster Money – for GoHenry users, it’s £3.33 and £15.78 respectively.

Where children are paid for doing specific tasks, making their bed, helping with the laundry and tidying their room are among the most common. But the most lucrative jobs are mowing the lawn (£3.47) or cleaning the car (£3.25), according to Rooster Money.

Experts agree, though, that in terms of supporting children’s developing money management skills, the amount children receive as pocket money isn’t actually that important.

“Research shows that it doesn’t really matter how much you’re giving children,” explains Tim Jay, professor of psychology of education at the University of Nottingham. “If they’re getting regular pocket money and starting to think about what they might do with it, this will have a positive impact on their learning about money.”

When to start

Professor Jay says there are advantages to starting early: “Giving pocket money affords you the opportunity to have conversations with a child about money, and gives the child the chance to start learning by doing. There’s evidence that the earlier you start talking to children about money, the more likely it is they’ll have a good level of financial capability as adults – so, the earlier you start giving children pocket money, the better.”

GoHenry co-founder and CEO Louise Hill echoes this. “A study by theUniversity of Cambridge found that kids had developed some financial habits by seven years old, so discussing finances with your children lays the foundation for them to develop a strong grasp of money for the years ahead,” she says.

How to give pocket money

An approach to pocket money that combines a regular sum with paid-for tasks is likely to be the most effective when it comes to supporting a child’s developing financial skills. “Having a fixed amount that’s not dependent on anything will help children to manage their own money effectively,” says Professor Jay. “We think that this helps children to planfor the future and gives them a sense of security around money.

“It can also encourage good saving behaviour. What we find with children who don’t have that regular fixed amount is that they’re much more inclined to just spend what they have right now because they don’t know when they’re going to have money again in the future, which creates an insecurity about money. Having some opportunities for the child to earn some additional money can be helpful as well.”