Is Pocket Money for Chores a Bad Idea?

Managing money is an important skill for everyone to learn! We can help kids begin to build these skills from an early age through the use of pocket money, but is pocket money for chores really a bad idea?

Introduction

Money! It makes the world go round, right? Some say it is the source of all evil and others say that managing money in the right way really can bring happiness. Whatever way you look at it, money is an important part of our lives and the sooner we can teach financial literacy to young children, the better.

Learning to manage money is an important skill that everyone must learn to be able to enjoy the benefits that come from spending, saving, and investing.

Making responsible decisions about how to spend money, learning to save and invest, and ensuring a secure financial future for yourself are important conceptual understandings that contribute to becoming a financially responsible individual.

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Helping your child develop these understandings from a young age is a very good idea, and paying children pocket money is a fantastic way to do it. However, should all household chores attract a monetary reward? Let’s unpack this idea..

child looking at pocket money jar
Make sure you are clear with your children regarding what chores will attract a monetary reward and which chores are expected of them because they need to contribute to the smooth running of the household.

Should kids get pocket money for chores?

If you decide to start paying your child pocket money for chores, it is important to be clear on your expectations in terms of what the pocket money is for.

Parents and children need to have a good understanding of the difference between jobs that are important for maintaining our personal spaces and our personal hygiene, as well as jobs that are a contribution to the household as a whole, versus jobs that deserve a monetary reward.

For example, we might teach children that every day, they need to make their bed, tidy their room, put their toys away, brush their teeth, wash their face and put their clothes in the right place. In my personal opinion, children don’t need to be paid pocket money for maintaining the cleanliness of their own room, for carrying out personal hygiene tasks and managing their own clothing.

“Getting pocket money helps a child or young person learn the value of money, how to use it and how to save it to buy something they really want.  It helps promote a sense of independence and, through experience, teaches kids how to make responsible financial decisions.”

caring.childstory.nsw.gov.au

What kind of message would we be sending to children if we pay them to carry out tasks that are in their own personal best interests? It would be more valuable to have conversations with children as to why it’s important to carry out these simple tasks and how they benefit from this, compared to the alternative. i.e – having a messy room where they can’t find their things or their clothes, or rotting teeth because they haven’t been brushed.

I also believe that there are certain chores children should complete because they are contributing to the household.

In my household, it’s just my son Andy and I. I’m a single parent working 3 jobs and I can’t possibly do it all. Every household will be different and the family dynamics and family rules will differ in every household, but as a guide, and in addition to the basic chores I mentioned above, I expect my 13 year old son Andy to complete the following chores WITHOUT pocket money:

  • Emptying the dishwasher (because he likes to eat off clean plates)
  • Taking rubbish out (because it’s gross to have rubbish lying around)
  • Helping me to prepare and cook dinner (because he likes to EAT that dinner)
  • Water the plants (because the plants need it, and he eats some of those plants, i.e – lettuce, basil and chives)
  • Help to clean up after our puppy (because the pup can’t do it for herself and it teaches responsibility)
  • Cleaning his own bathroom (he’s 13. Need I say more…?)

Following are the types of chores that I will pay him pocket money for:

  • Dusting surfaces and skirting boards
  • Vaccuuming and mopping floors
  • Cleaning cobwebs off the balcony
  • Helping to wash the car
  • Cleaning out kitchen cupboards
  • Walking to the shops to get a few groceries by himself

The expectations surrounding chores and pocket money will differ by many variables; age of child, by their capabilities, time constraints, homework and extra curricular commitments, as well as the family financial situation.

There have been times where Andy’s pocket money has been cut or reduced based on how much spare cash flow I personally have and my need to prioritise bills or allocation of funds to other things.

mother handing child a coin
Remember, do what is appropriate for your own household, rather than keeping up with other families. If you can’t afford to be handing out pocket money, that is ok! You can reward with other privileges such as extra screen time or choice of family dinner or movie.

What is a good age to start giving pocket money?

Children could start receiving pocket money as young as 4 or 5 years old. There are age-appropriate chores for children as young as toddlers, but it is around 4 or 5 that you can really start helping your child understand how money works, and the value of money.

A good indicator of when your child is ready to start learning about money is when they start demonstrating the understanding that you need money to buy things.

How much pocket money should kids get?

This is entirely dependent on your family’s financial situation, how much you can afford to pay your kids, and how much you are comfortable to hand over. This will vary greatly between different families, so do what is best for your family.

Scott Pape is known as the ‘Barefoot Investor’ and he has written several books to help people learn about money matters. His most famous book ‘The Barefoot Investor’ introduces the idea of the Barefoot Buckets which I explain more about in my article here. He also wrote a book called ‘Barefoot Investor for Families’ which talks more about financial literacy for kids.

Scott suggests that $1 per year of age is a good guideline for knowing how much to pay kids for pocket money. For example, a 10 year old would receive $10 per week for completing their required chores. Scott’s website provides a huge amount of useful information for families when it comes to raising money-responsible kids: How Not to Raise a Spoilt Brat — The Barefoot Investor – Scott Pape.

What are the advantages of giving kids pocket money?

There are a great many positives that come from giving kids pocket money. Some of these may include:

  • Kids learn about financial management in an authentic way.
  • It teaches kids how to manage limited resources.
  • It provides an opportunity to learn about budgeting and saving.
  • It allows kids to make choices about money and learn from the consequences of those choices (whether good or bad).
  • Promotes a sense of independence
  • Helps to teach the value of hard work
  • Kids can feel a sense of achievement and accomplishment for a job completed well
  • May reduce the risk of them getting into debt as young adults
mother with kids and pocket money chart
It can be a good idea to involve children in the decision-making process regarding particular chores, the reward for those chores and how the money will be divided up

What are the drawbacks of giving kids pocket money?

As with everything in life, there can be some negative impacts or drawbacks to pocket money systems.  Whilst most of these stem from errors in the way parents are setting up and managing pocket money, it is important to recognize where it can go wrong;

  • If pocket money is handed out with no expectations for completing chores or for doing them properly, kids will learn to expect something for nothing.
  • You may have to accept that your kids might choose to spend their money on things you disagree with –  like junk food or crappy, plastic toys.
  • It is possible that your child might experience pressure from their peers or be taken advantage of, if they have spare cash.
  • Reduced cash flow for parents

“At some stage, children need to learn that there will always be people who have more money than them and others who have less. It helps children to hear that more money does not always make people happier.”

parenting.sa.gov.au

What are some guidelines for paying pocket money?

Here are a few tips for ensuring that your pocket money system is effective and beneficial for you and your child;

  • Be clear with your child/ren about what chores will and will not attract a pocket money reward, and WHY.
  • Decide on a clear system, whether it’s a dollar amount per chore, or a set dollar amount per week for a set number of completed chores.
  • Be willing to negotiate with your child about how much money should be saved, spent, invested, or donated. Involve them in the decision-making process.
  • Although there are suggested guidelines for families, only pay what pocket money you can afford.
  • Pay pocket money on a set day each week and try not to miss any payments.
  • You can deposit an older child’s pocket money directly into their bank account to help them become familiar with having and using digital money and an ATM card.
  • Be mindful about paying pocket money in advance. In these circumstances, consider a clear repayment plan so your child can learn about borrowing and lending money.

Scott Pape developed what he calls the ‘jam jar approach’ to help kids manage their pocket money. He suggests a system of 3 jars, labelled ‘spend’, ‘save’ and ‘give’. Each week, when children receive their pocket money, they are encouraged to divide the money into these three jars. With the ‘spend’ jar, they can buy whatever they want, whilst the ‘save’ jar is for working towards a particular savings goal – like buying a new bike or game. Finally, the ‘give’ jar is to teach kids to be generous and kind, as giving is something that can help make you very happy in everyday life.

Scott’s system has been used successfully by thousands of families across Australia (and the world). If you would like to learn more, I thoroughly recommend the Barefoot Investor for Families book.

When my son Andy began earning pocket money, we set up the 3 jam (Vegemite) jars, and had a good discussion about how to divide up his pocket money. When he got his first casual job at Subway last year, we set up a bank account, ensured he had his own ATM card, and agreed that he would divide up his money in 4 ways; Spend, Save, Give and Invest. Andy got to choose what percentage was to go to each ‘jar’ as long as his money went in 4 different directions. Often he chose to put 80% in spend, with about 10% in save, 5% in Give and 5% in invest, which was totally fine, as I wanted him to feel in control of his own money, as long as he was also learning the value of saving, investing and giving at the same time.

Are there different apps that can help with the management of pocket money?

We certainly live in a technological society where there is an App for almost anything…including for managing pocket money. Whilst there are quite a number of Apps to choose from, the Spriggy App is a very popular one.

With Spriggy, each child can receive a VISA card that is linked to a parenting App. The App allows the setting of chores, where kids can tick off when tasks are completed and parents can approve the task before the money is paid into the child’s Spriggy account. They can even set up savings goals to work towards if they choose.

I have some friends who use Spriggy with their children of various ages and they rate it very highly for teaching children valuable financial skills.

You can learn more about Spriggy on their website here.

Some other popular pocket money Apps that you might like to check out include:

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Chores ideas for kids

There are chores appropriate for kids of all ages. You can also take a read of my article ‘Kids doing Household Chores; Right or Wrong?’

Here is a list of possible chores based on a child’s age:

Kids aged 2-4:

  • Help make their bed
  • Help pick up toys
  • Fill a pet’s water bowl
  • Place rubbish items in the bin
  • Take dirty clothes to the laundry

Kids aged 4-6:

  • Help set and clear the table
  • Help prepare food in the kitchen
  • Match socks in the laundry
  • Be responsible for a pet’s food and water bowl
  • Watering plants/ helping with gardening
  • Wipe dirty marks off walls

Kids aged 7-10:

  • Vacuum and mop individual rooms
  • Fold laundry and put it away
  • Pack and unpack dishwasher
  • Wash dishes
  • Help prepare food.
  • Empty rubbish bins and take out the recycling
  • Clean glass doors

Kids aged 11-14:

  • Clean bathrooms
  • Wash and clean out the family car
  • Rake leaves and pull out weeds
  • Learn to use the washing machine and dryer
  • Put all laundry away.
  • Take the rubbish out

Kids aged 15-18:

  • Mow lawns and other yard maintenance
  • Dust, vacuum, clean bathrooms and do dishes
  • Prepare an occasional family meal
  • Babysit
  • Wash windows
  • Deep cleaning tasks eg. Scrubbing grout in bathrooms.

Here is the ultimate list for age-appropriate chores on the Child Development Institute website.

5 dollar note in back pocket, pocket money
Having a pocket money system in place can teach children many valuable skills including responsibility, budgeting skills, and general money management skills including saving and avoiding debt.

 Key points regarding pocket money for kids

How pocket money systems are set up in your household will depend on your family circumstances, the ages and developmental abilities of your children,  and also on your own personal financial situation. Whilst it is a great way to teach kids about money, your first priority should be paying your own bills and ensuring you have a solid emergency fund, so if your family budget doesn’t stretch far enough to allow for pocket money – then that is ok.

If you and your family are struggling financially, there are many places that can help you. Whilst they might not be able to change the money coming in, they could help you develop a plan and budget in a way that will help maximise the family income and create some savings goals.

MyBudget has worked with thousands of families to achieve financial freedom and support them in their management of money.

The government’s Money Smart website also has a wealth of helpful financial information and articles.

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How can I reward my kids for chores if I don’t have enough money to budget for pocket money?

An alternative to pocket money could be rewards in the way of privileges such as:

  • Choosing the family dinner
  • Choosing the movie for movie night
  • A special outing – quality family time
  • Choosing a game, book or DVD at an op shop
  • Extra screen time

At one stage, my son Andy was much more interested in extra screen time, opposed to actual pocket money, so I set up a reward system where each chore attracted a set number of minutes he could play on his gaming device each week. This worked really well for us for a period, until he was more interested in money once again.

How much pocket money does Andy get?

 As I described above, Andy is expected to contribute to the household and complete certain chores without monetary reward.

He is paid per chore, rather than a set dollar amount per week. The dollar amount ranges from $2 – $10 per chore, depending on how long it takes and how complex the chore is.

As a general rule, he is paid the following:

Vaccuum and mop the whole house: $5

Dust surfaces and skirting boards: $4

Help me wash the car: $5-$10

Clean stove and kitchen bench: $3

Help with gardening and cleaning balcony: $5

Conclusion

When it comes to money, we all want to get it right. We want to live a comfortable life where we don’t have to worry about where our next meal is coming from and be able to take that family holiday once a year. We also want all of this for our kids in the future. To help set them up for success, we need to start teaching kids early how to manage their money and make good financial decisions for themselves.

With the help of authors such as Scott Pape, websites such as MoneySmart, and podcasts such as She’s on the Money, families are learning how to manage their own money and teaching the next generation the skills they will need to be financially responsible adults.

Pocket money is a great teaching tool when managed efficiently and can be a wonderful investment for your children’s future. Giving the gift of financial management skills will be one of the greatest blessings they can receive.

What are your thoughts when it comes to pocket money? Did you receive pocket money as a child? Do you have the same system for your own children, and is it linked to chores? Let me know in the comments. It’s interesting to hear how other families are doing it!

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