Let’s be honest, kids generally like the idea of getting pocket money – maybe they want more sweets or want to save up for a new toy. But as a parent, it’s not always easy to decide if you should pay pocket money, when to start or how much pocket money you give your child.
Here at GoHenry, we believe that regular pocket money is one of the best ways to accelerate your child’s financial education and teach them about independence. Let’s look at some of the pros and cons of giving your child pocket money and if pocket money really does teach your child independence.
What are the benefits of pocket money?
We know that giving pocket money isn’t an option for everyone, but there are some benefits if you choose to. The biggest benefit of giving pocket money is that it helps you teach your children about finances and budgeting. Money and finances can be a confusing topic to explain to kids, so giving regular pocket money from a young age can help you talk about money with real-world examples.
Giving pocket money can be good for parents as well as kids. Does your child ask for sweets or toys whenever you’re in a shop? Or maybe your teen asks for money to go see a film or have lunch with friends? Giving pocket money means that your child has their own source of money that they can use, rather than asking you every time they want something. It also helps parents keep track of how much they’ve given to their kids, making it easier to stick to a certain amount each week or month. Lastly, it gives your children a sense of financial independence that can be a great route to learning healthy habits.
Related: Pros and cons of pocket money
Are there any negatives to giving pocket money?
Of course, it isn’t totally clear-cut. We know that some people feel giving their children pocket money might not be the right choice. For example, if pocket money is given without any lessons on finances and budgeting, your child might not understand how to spend their money responsibly. Some parents prefer to only give their children pocket money as a reward for doing chores, as this can help teach your child the value of money and reinforce the link between work and earning money.
How does pocket money teach independence?
There are many ways that you can use pocket money to teach your child financial education. GoHenry research shows how financial education – including pocket money – can help establish great financial habits for adulthood. Our research discovered that over half (51%) of those who received financial education as a child have up to £5,000 cash savings in an ISA or savings account compared to under a third (30%) of those who didn't. It doesn't matter how much you give them. If you do decide to give your children pocket money, give them regular pocket money. This can provide children with a sense of independence as they can budget and save their own money.
Pocket money gives children freedom and independence
When your child earns pocket money, they have more freedom to spend their money how they want. This can teach valuable lessons about independence, and help to build financial confidence in your children.
If they're able to pay for things themselves, they'll feel more self-sufficient and learn how to be financially responsible. Alongside pocket money, giving your child a prepaid debit card from the age of six with GoHenry is also a great way to help your children understand how to manage their own finances from a young age.
Pocket money teaches budgeting
Pocket money can be a great way to help your kids learn about budgeting. If your children receive a set amount each week or month, you can explain to them how to budget their money rather than spending it on the first thing that catches their eye. Our research shows that 79% of adults who did not receive financial education as a child said they fell behind on utility bills or council tax payments over the last six months.
Pocket money teaches saving
If you choose to give your child a set amount of pocket money at regular intervals, you can use this to teach them how to save up for more expensive items on their wishlist.
Pocket money teaches the value of money
Some parents like to give their children pocket money for doing chores or paid tasks. With GoHenry, you can easily set tasks for children within the app and pay them when the task is complete. This gives your child the opportunity to earn money and understand how working hard can get them money for the things they want. We found that over 70% of young people feel it is important to earn their own money.
Pocket money teaches price comparison
Having a limited amount of money can help encourage your child to compare prices for items they want to buy. These days there are so many options for buying items both online and offline, and if you give your child a set amount of pocket money, you can help them understand how to get the most out of their money.
How can GoHenry help you teach your child independence?
With your GoHenry parent app, you can set up regular pocket money payments to your child that they can manage and spend with their own kids debit card. This means that your child gets a sense of financial freedom and can participate in the digital economy.
You can also set up tasks within the app for your child to complete. When the tasks are complete, your child gets paid.
GoHenry kids get access to our in-app Money Missions. With Money Missions your child can watch videos, take quizzes, earn points and badges while gaining money skills for life. Watch as your children pick up new skills, one bite-sized lesson at a time. Lessons cover money basics, investing, saving, compound interest, borrowing, giving, and more.
Whether you choose to teach your child financial independence through pocket money or through another method, we're here to support that. Our research shows that almost half of adults who didn’t receive financial education earn less than £15,000 a year — so we make it easy for your child as they start their financial journey.