Parents give children £7.75 a week, or £403 a year, in pocket money on average, according to new research from Confused.com based on 1,000 adults with kids aged four to 16. The average age for starting to pay pocket money is seven.
Tara Evans, Personal Finance Editor at Confused.com, says deciding how much to pay depends on what you can afford. Her starting point is to look at the money left after essential bills and set aside no more than around 2.5% of that for pocket money.
If a household has £1,000 left each month after rent or mortgage, energy, food, childcare, transport and other essentials, 2.5% is £25 a month - about £5.75 a week. That could be rounded down for a younger child or up for an older one expected to pay for more things themselves.
What if £25 feels uncomfortable?
If £25 feels uncomfortable, pay less. If you have more than one child, decide what you can afford as a total family pocket-money pot before dividing it, rather than automatically multiplying the figure.
The exact amount for your family is the one you can pay consistently without dipping into an overdraft, using credit or cutting back on essentials. If the affordable answer is 50p, £1 or nothing at all for now, that is absolutely fine.
Money lessons can still be taught early on using coins, a homemade chart or money received for birthdays. The lesson is more valuable than the size of the payment.
When should you start?
The survey found children begin receiving pocket money at seven and a half on average, with more than half starting between five and eight. Evans says she would not treat that as a deadline.
A child is ready when they understand that money can be spent only once, can make a simple choice between two items and can wait at least a little while to save towards something. Some children will be ready earlier than others.
With younger children, physical coins can be easier to understand. They can see a jar filling up and watch the money disappear when they buy something. As children get older, a bank account, prepaid card or app can teach them about balances and contactless spending - but parents should check fees, age limits, parental controls and cash withdrawal rules first.
Chores and consistency
Evans thinks linking pocket money payments to chores is a good idea for older children, but parents need to be clear about what are normal household tasks linked to family life that they are expected to do, such as cleaning up after dinner. Three-quarters of parents in the survey link at least some pocket money to household tasks.
Whatever amount you choose, be clear about what it has to cover. A five-year-old's £2 might be entirely theirs to spend, while a teenager's larger allowance might need to cover lunches, travel, phone costs or going out.
Try to pay it on the same day each week or month and try to encourage saving, perhaps with separate piggy banks or jars for spending and saving. Let children make mistakes like spending it all on sweets - while you might want to rescue them, don't do it. They are learning a vital lesson.
Evans plans to start giving her twins a very small amount like 50p when they are five years old and then increase it as they become responsible for their own spending. Pocket money should teach kids that money has limits, but it would be silly to let it overstretch your own budget to pay it.
