Budgeting: How much pocket money by age, and how to make it teach something

How much pocket money should a child get by age?

There's no correct figure, but a simple rule works for many families: one unit of your currency per year of age, each week. So a seven-year-old gets 7 a week and a twelve-year-old gets 12. Adjust it for what you can afford and what things cost where you live.

The amount matters less than what it's for. Pocket money teaches the most when children have to make choices with it.

What should pocket money cover at each age?

More as they get older. Here's one way to hand over responsibility, in amounts that work in any currency:

If you're handing over a bigger area, like clothes, add the amount you'd have spent anyway. A teenager given a clothing budget learns far more than one who asks each time.

Weekly or monthly?

Weekly for younger children, because a month is a long time when you're seven. Monthly from around 13 or 14, which helps them practise planning across a longer period, like an adult with a salary.

Pay it on the same day each time. Reliability matters: it's hard to plan with money that turns up when someone remembers.

Should pocket money be tied to chores?

Families do it both ways. Some pay pocket money with no strings and expect chores as part of family life. Others pay for specific jobs. A common middle ground is a base amount for being part of the household, with extra for bigger jobs, like washing the car.

Whichever you choose, be consistent and clear. Children notice quickly if the rules change week to week.

How do you teach saving with pocket money?

Give them a goal and a place to put the money. A clear jar works well for young children, because they can watch it fill. Older children can use a savings account.

A few ideas:

• Split pocket money into "spend" and "save" jars, say half each
• Offer to match what they save toward a goal, which shows how saving grows
• Let them choose the goal themselves
• Show them how many weeks it'll take: a 40 game at 10 a week saved is four weeks

For teenagers, a basic bank account with a card teaches them to check a balance and see what they've spent, and gets them used to digital money, which is what they'll mostly use as adults.

Matching is especially good at teaching the idea of growth, since they see the money grow faster than they put it in.

Should you let them waste it?

Within reason, yes. If a ten-year-old spends a week's money on sweets and then can't afford the toy they wanted, that's a cheap lesson. Rescuing them each time teaches them that money appears when they run out.

Talk it through afterwards without lecturing: what did they want, what happened, what would they do next time? Children often work it out if they're given the chance.

Resist the urge to lend against next week's money too often. It's a small version of a credit card, and it can teach the wrong habit.

How do you talk about money with children?

Openly and in simple terms. Let them see you comparing prices, choosing between two things, or deciding to wait for something. Explain why you're not buying something in terms they understand: "we're saving for our holiday".

As they get older, show them parts of the household budget. A teenager who knows what the food shop costs each week has a much better sense of money than one who's never seen it.

How do you fit pocket money into your own budget?

Treat it as a regular cost. At 10 a week, that's 520 a year, so it's worth a line in the family budget. If you're giving more responsibility, like clothes, move that amount from your clothing line to theirs, so the total doesn't grow.

In Wealtie, log pocket money in its own line in your expense categories, so you can see what children's costs come to each month. The family budget has more on planning for a household with children, and a monthly limit in the budget tracker keeps the total in view.