What is Pocket Money used for?

The Pocket Money Issue is something that I’m constantly asked to referee when I visit families.

How old they should be when pocket money needs to be started, how often they should get it and what purpose the money serves are some points for discussion. And the big question – how much should they get?

Lots of people tell me that kids need to learn how to manage their pocket money first as a stepping stone to becoming “financially astute” in later years. That’s true; although I think that financial responsibility would be a much better lesson to learn. There’s no point in understanding how money markets and share portfolios work if you live on credit and don’t pay your bills.

But whose responsibility is it to teach these lessons? Does it belong to the parents, the school or to somebody else?

The whole debate opens up a myriad of questions – where does the pocket money come from? What’s its purpose and what does it cover? Will the kids have a need to budget the money if their parents also buy them all the things their weekly money doesn’t cover or when it runs out?

Is pocket money a payment for doing household chores? If that’s the case, then how much does a ‘stay-at-home’ mother earn? And who pays her anyway? I’m sure you’ve seen the many articles that have been written about how much it would cost to employ somebody to do the mundane jobs that are a necessary part of living in a household.

So while it’s important for young people to learn from an early age that if you want money you have to be prepared to work for it, there’s got to be a happy medium.

Surely part of what our kids need to learn is that there are certain things in this life that we must do without getting paid. Some days I would like to strangle whoever not only coined the phrase – “you get nothing for nothing”, but taught it to our kids as well.

Call me cynical but I have a mental image of dozens of young adults who have moved out of home with no clean clothes to wear, filthy floors and no clean dishes to eat from because there’s nobody to pay them to do the housework. Of course take-away food doesn’t need dishes to eat off, but who’ll get paid to take out the garbage?

Is pocket money a reward for good behaviour? What denotes a ‘good kid’ and what happens to the kids who have parents that I hear complaining about how ‘bad they’ve been’ lately? Do they still get their allowance? In which case, one might ask if the money is being used as a bribe for good or appropriate behaviour.

Of course, a lot of the pocket money questions that I have to answer are about how to fit these payments into the family budget. Sadly, I see many households where the pocket money portion is larger than the weekly allowance for utilities and it’s no wonder that some families are struggling to pay their bills on time.

Whilst every household and family is different, some of the potential pocket money problems can be alleviated by all parties discussing the family budget and where the allowances fit within that.

A good rule of thumb – if the children are too young to understand or participate in a family budget discussion, then they just might be too young to receive an allowance of their own.

The answers lie within our individual concepts and values of money management.

 

(c) Carmel McCartin – Budget Bitch
 
And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

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