The Philosophy of Pocket Money for Children

GUEST ARTICLE: “Why give your kids pocket money? Are you using it for discipline or to encourage involvement at home? Do your kids simply need to practice handling money? Keeping up with their friends at school? Perhaps you want to share the family’s income? This article examines some philosophies of pocket money.”


Eventually you are going to be confronted with the great pocket money (aka allowance) question. You may feel fortunate enough to be able to duck, if the children in question are not yours – for the rest of us some thought is required! In any case, the questions of how and why to hand over your hard-earned to kids bear thinking through.

Now to be fair and balanced, we might for a moment contemplate the ‘no pocket money’ position. There is an argument to be made to leave kids to be kids, not to burden them with adult concepts before their time. You may have decided to invest the money directly that would have been given to children. This can be a fantastic way to set your kids up for later in life with a nest egg well under way.

Perhaps “money is too tight to mention” in your family budget? Even very small amounts can provide the first steps towards independence. Others might take the position that children can ask for what they want, or need and on the whole these requests are fulfilled. If that works for you, great!

Do I subscribe to those opinions? No! My feeling is that children are already well aware of our capitalist culture, especially if they’re allowed: TV, to mix with other kids, internet access or even a school canteen. Best we begin to arm them with tools to make smart money choices sooner rather than later.

There is simply no substitute for practice, no way to avoid the universal truth that learning skills comes best from trying and failing, perhaps many times. Wouldn’t you rather your kids make these necessary monetary mistakes with a month of saved pocket money instead of a month of saved wages when they enter the workforce?

When to start with pocket money is an important question to ask. Naturally this depends on the individual child, though a good consensus age to start seems to be between four and six. Once a child understands the ideas of exchanging money for goods and the concept of limited supply (i.e. when the money runs out, no more until next time) – then they are ready to receive pocket money.

Once you have made the decision to allow your kids some money, do they have to earn it, or will it come regularly without (many) strings attached? This decision comes down to personal choice and circumstance. Let’s look at some of the options.


Where pocket money is given on a reward basis


This is the system seen most often in popular culture, where the kid(s) are assigned a list of age-appropriate chores or jobs around the house. Younger earners may find making their beds, putting dirty clothes into the laundry basket or feeding pets on their list.

Older children may graduate into helping prepare meals, do laundry or mowing the lawns. Always set the system up for your kids to succeed – it will build confidence and it is the point of a pocket money system, after all.

There are variations to earning systems: you may have a set list of jobs to be done, a public record (a whiteboard or list on the fridge perhaps), maybe even an understanding that generally helping out through the week is also required.

It may be that a rigid list is not your style, rather a general attitude of helpfulness and pitching-in is expected. Be careful, though, as kids will often take a position of asking for specific amounts of reward for every little thing they do. That is when you need to describe the difference between sharing the family workload and opportunities to earn extra money!

Ultimately the system you choose comes down to following your own personal style and the values, skills and attitudes you want to give your kids.


Where pocket money is given as a gift or sharing family income

The other major system is based upon the gift economy – where things of value are routinely shared or given without strings attached. My family’s income has a strong variable component, which is suited well to this system. As my kids know, when we have a good week they are in line to share in the extra money that comes in, at their agreed weekly rates of course.

Freely sharing aims to encourage similar behaviour in our children. Kids are generous beings by and large, so here we are trying to keep that going.

We don’t want them to become like the finance journalist in this Monty Python sketch about money!

One of the great joys of having kids is to see their faces light up. When pocket money is a gift, you can see that every time. As far as chores go, usually an allowance comes with an understanding that the recipient will freely help out around the house. How strongly this reciprocal arrangement exists is up to you. The Gift Economy has no strings – you’re hoping the kids will then freely pitch in. If that doesn’t sound like you, then an ‘Earning’ system is going to be more your style.

While this pocket money may be freely given, you will probably want to direct how the money is handled – rather than allow a child to ‘freely spend’ all of it! In fact no matter how you decide to provide pocket money, some guidance on how to handle it is very useful. Take a read of the ‘Four money boxes pocket money system‘ for some ideas.

Questions for other situations: when you have more than one child, does that change things? It may – consider a pool of pocket money available in a week. The standard split could be shifted according to the amount of work done or even behaviour towards each other!

Ultimately there no hard and fast rules – be flexible and creative! The important thing to remember is to ensure any pocket money system you use will reflect the values of your family.

This guest technology review has been written by my friend Matthew. Husband, father of 2, Internet generalist, Scout Leader and life hacker who is passionate about learning and sharing ways to save and invest for kids, Matthew is looking for ways to apply old wisdom and new technology in a quest to “help people create their own Golden Goose“.

smartypig Smartypig Australia kindly donated a $110 giftcard for me to give to the next guest author who wrote 2 articles about saving money, I will give this card to Matthew.

If you’re a blogger or an expert about a topic I cover on this blog I encourage you to contact me and I’ll consider publishing your guest article here including generous attribution and back links back to your website as thanks for your contribution

4 thoughts on “The Philosophy of Pocket Money for Children”

  1. I have known parents who keep money secret from their children, by which I mean their own incomes and expenses, etc. These children grow up without a clue about how to handle money, or bills, or credit cards, or credit scores. Often, figuring these out on your own is difficult, and downright dangerous (in terms of how easily one can ruin a credit score).

    No, I think it’s best to force your kids to learn and practice with money and all of the responsibilities, and benefits, that go along with it.

  2. I have to agree I think that you should begin teaching your children about the importance of money right away. This will teach them that it does not grow on trees and will teach them how to be responsible with it.

    In turn it will make them more responsible and will prevent them from getting into any type of financial difficulties as they get older.

  3. Is very important that you should begin teaching your children about the importance of money right away.

    Regardless of whether parents have the money or not to buy their children what they want, they would be wise to occasionally teach their kids the important lesson of ‘going without.’

    Now, of course I am not talking about depriving your children, or withholding the basic necessities of life; but, how many times has a child wanted (not needed) this or that, and daddy bought it for them? Too often!

    This is also not to suggest that buying nice things for our children is bad; rather, parents need to stop being guilty of giving too much and expecting too little. Most importantly, we need to teach children how to: sacrifice, work, appreciate, give, share, be patient, and be content and happy with what they have.
    Cheers! Be careful with children!

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