How to give pocket money — FT advice
In a new series, Claer Barrett, FT Money editor, shares her expert advice on the everyday challenge of how to give pocket money to children: at what age; how much; what to do with it; and how even 7-year-old children can have contactless cards.
Every Saturday morning my dad would press a shining 50p piece into my hand in the weekly pocket money ritual. Now that was 30 years ago in 1987, when I was just 10 years old. And I would sometimes save the 50p, but more often than not I would race off down to the shops and spend the lot on sweets and a copy of Jackie magazine.
Now turns out that my dad probably should have given me a pay rise. Research by the Halifax Bank shows that 30 years ago, the average child got pocket money of just over one pound per week. And today that figure has risen to over seven pounds a week. So are today's parents guilty of giving their children too much money?
So you might have heard of the marshmallow test. Give a child a marshmallow, if they don't eat it straight away. They can have another one later.
Now the same can be applied to saving. If they save a pound of their pocket money, parents could offer to match it with another pound. And if they put their money in a High Street bank account, they could even get an interest rate of up to 3%. So parents, it's worth shopping around.
Parents also want to teach their children about the value of money and the most common way perhaps is some kind of chores for cash trade off. Now my stepchildren quickly learned the value of withholding their own labour when I tried this with them. And said, if you do my shredding, I'll give you 50p. And they said, no, we won't do it unless you give us a pound. So my advice would be have a board chart of what they have to do before they get their pocket money, and stick to it.
Oh, that'll put hairs on your chest. Of course, some children don't want to be paid in cold hard cash. I'm thinking about phone top ups, digital downloads, maybe an in app purchase for the game that they're playing. So what can you do? Well, you can now get [INAUDIBLE] payment cards for children as young as seven years old, which parents can monitor via an app.
Children don't have to just save or spend their pocket money. How about giving some of it away? As well as matching the money they save, you could also match the money they donate. Teaching your children about money should be a fun part of every weekend, seriously. Because if they learn these lessons when they're young, just think of how valuable that will be when they've grown up.
FIlmed by Steve Ager. Produced by Natalie Whittle. Directed and edited by Josh de la Mare.