Yahoo Finance Pocket money trick to stop kids becoming 'spoiled brats': '$750 a year'
Sydney Mum Kate Raue is giving her 9-year-old daughter $5 a week in pocket money for doing chores around the house.
Pocket money can be a good way to teach kids about the value of money and how to manage their cash. But deciding the right amount of pocket money can be a tricky question many parents face.
Just over half of Aussie parents (57 per cent) pay their kids pocket money, new research from ING revealed, with kids receiving an average of $14.40 a week or $750 per year. For most kids (73 per cent), they have to earn their pocket money by doing chores around the house.
Sydney mum Kate Raue told Yahoo Finance she gives her nine-year-old daughter, Allegra, $5 a week. She earns the spending money by doing chores around the house like unloading the dishwasher, putting away washing and tidying the house.
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“It’s teaching her a little bit about the value of money, which I talk to her about all the time and it gives her autonomy also about how she spends her money,” Raue said.
“She doesn’t just ask for superfluous stuff all the time and it makes her stop and consider whether she wants to spend the money or not and gives her pause about how it is spent and the value of things as well.”
Raue said she encourages her daughter to put aside her pocket money and save for bigger things, along with having some money for spending.
She said Allegra was currently saving up for a Nintendo Switch and also hoped to put money into shares, which she had become interested in after seeing her parents’ investing practices.
With digital payments becoming the norm, Raue said she pays Allegra through kids' pocket money app Spriggy. But she said she also tries to show her the physical value of money by collecting cans and selling items on Facebook Marketplace.
“It’s interesting for her to see that you get money from doing these things and it is a solid, tangible thing,” she said.
The cost-of-living is putting pressure on many Aussie families right now and it appears that pocket money isn't immune either.
A Choosi survey last year found the average Aussie child was getting $21 a week in pocket money, based on parents with kids under 19. That means kids are getting nearly $6 per week less right now.
Should I give my kids pocket money?
Pocket money can be a thorny topic for Aussie parents. On the one hand, it can be a good way to teach kids about the value of money. But on the other hand, it can be seen as giving kids money “for free”.
Barefoot Investor Scott Pape thinks kids should be paid pocket money but they should be working for it.
He said this gives kids the satisfaction of “earning a buck” but also helps educate them about how money works. He said giving kids money without linking it to work was common but warned it could lead to lifelong problems with money.
“My biggest fear is that my kids could become spoiled brats, but there are two ways to guard against that,” Pape previously told Yahoo Finance.
“Learning to work hard and … to be generous and use your money to help others.”
Yahoo Finance contributor Rebecca Franks doesn't agree with “paying youngsters for simply existing" and negotiated what constitutes tasks that are worthy of earning pocket money.
“Personally, I believe it's important for children to realise that not everything comes for free, as let's face it — in the real world, it doesn't,” she said.
Franks said she personally won’t pay for chores like making the bed, packing clothes away or keeping rooms tidy because she thinks it “should be a basic expectation once kids reach a certain age”.
But she said this is up to individual parents to decide what is “fair, reasonable and manageable for their own kids”.
Tips for parents
ING head of consumer and market insights Matt Bowen said pocket money could help kids "learn the concept of the value of money".
"Talk to your family and kids about finding an amount that everyone agrees is fair value, based on the chores or activities they’ll complete," he told Yahoo Finance.
“Our customer research showed having conversations with your kids about pocket money may help with their money habits over the long term, with 8 in 10 Aussies saying their parents taught them how to save.
"Whilst every household operates differently, the research also suggests that most parents agreed kids must do chores in order to unlock their pocket money."
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