New Year’s Guide to Pocket Money
2131 December 2012 by thaliakr
Pocket Money Day, Monica Blatton (Photo credit: Monica Blatton)
I can’t resist a request. Daina owes me a Manifesto Confession for this post! (I also work for chocolate.)
Daina wants to hear from y’all about pocket money. What is your approach? What did your parents do with you?
Like many of us, she’s keen to build some financial literacy into her kids’ lives, so it’s not just about giving them access to fifty-cent mixtures (presumably inflation has hit them, but I can’t bring myself to write ‘five-dollar mixtures’) at the dairy.
SBJ is a kleptomaniac with expensive taste. Before the age of one he had stolen a wallet and collection bags at two different churches. But other than that and stuffing coins in his mouth whenever possible, he’s doesn’t have much use for pocket money yet.
But you can read about the allowance system my parents ran for us on this discussion over at Kiwi Families. My Mum was an economics teacher and has lots of useful stuff to say!
The main article she’s commenting on is by Financial Adviser and blogger Daniel Carney, and contains some great advice about how to teach your kids about money, like:
- Don’t talk negatively about money
- Get saving
- Reward the kids for cheaper household bills
Thought-provoking, right? He also links to several other resource websites for teaching kids about money, so do check the full post out. Kiwi Families also has a separate article about pocket money with a range of ideas.
Thanks to the lovely Lou I am reading a sort of classic American parenting book at the moment called Parenting with Love and Logic by Foster Cline and Jim Fay.
I really appreciate their basic approach which is to let kids experience natural consequences – sometimes pretty uncomfortable – when they’re young and not too much is at stake. If we combine this with lots of empathy, it creates an environment for deep learning that lasts. A basic example from page 43:
It was a frigid Colorado evening, and my (Foster’s) family was heading out on an errand. Gathered at the door, my wife asked our six-year-old son, “Andrew, do you want to wear your coat?”
He said, ‘No, I don’t need my coat.” He was wearing a T-shirt. Modeling responsible adult behavior, my wife said, “I’m sure glad I’m wearing my coat.” Then she put on her coat, and the family got into the car.
Two blocks from home, muffled sounds came drifting from the beackseat – the unmistakable sounds of shivering and teeth chattering. My wife said, “Do I detect goose bumps in the backseat?”
“Y-y-eah-h-h!” Andrew stuttered. The next words spoken were some of the wisest ever to passs from Adnrew’s lips: “N-n-n-ext time, I’m g-g-g-oing to wear my c-c-c-oat!”
“Oh, honey, that sounds like a good idea.”…
Had my wife said, “Wear your coat. It’s cold out,” Andrew probably would have said, “No.” And she would have said, “I’m your mother, wear your coat.” Then Andrew would have been sitting in the backseat, warm as toast, hating her, and not learning a thing.
So their approach to pocket money is governed by their love-and-logic philosophy. Some of their suggestions (121-122):
Rule Three: Never insist that children save their allowance.
They can’t learn to handle money if they stash their allowance in a shoe box… Kids must go through their own economic depression – wasting money and then not having any when they need it – to learn about money.
Rule Four: As long as they’re not engaged in illegal activity, allow children to spend, save or waste the money any way they see fit.
They can use it to hire others to do their chores. They can even hire a babysitter if they don’t want to go somewhere with the family. But there’s a catch: When it’s gone, it’s gone. No more allowance until the next week’s envelope.
They go on to tell the story of Jim’s son Charlie, who squandered his lunch money and had to live on two meals a day for a week (his parents made sure they were good ones!).
So, that’s all the wisdom I can supply on the subject – from my parents, a financial adviser and a parenting book. But Daina asked about this on the thread on patchwork parenting, so the real point is to ask all of you for your wisdom. Go ahead, please!
Sacraparental 
Ooh thanks for the great links Thalia, forgot your Mum was an economics teacher! I have a couple of months to get my head around this before we start when Mr 4 has his 5th birthday so please chime in everyone :)
My pleasure Daina. And I’m looking forward to your patchwork questionnaire! :)
Our children receive monthly pocket money, mostly because I’m not organised enough to provide the cash every week. At first I tried to push them to save at least a chunk of the money towards big things (a habit I want them to have firmly entrenched by adulthood) but decided this had to be their decision. The kids thought saving was a good idea but always found many small things to spend their money on until it was all gone. The biggest break through for our nine year old came when we found a much desired skateboard at the local second hand shop for $12. He only had $8 left and I refused to lend him the $4 difference. He had to leave it behind in the shop. This may seem harsh, but ever since then he has chosen to save a good chunk of his pocket money until he has enough to buy the bigger things that he really wants.
Oh, that is a GREAT story about the skateboard lesson. Love and logic parenting vindicated! Tough lesson when the stakes are low, deep learning and changed behaviour – brilliant!
Well done, Hester!
Monthly is a challenge for the make-it-last aspect for kids (though I’m totally with you on the reason!). How often do any of the kids have money left by the end of the month?
Another thing I am wondering about is interest – perhaps you could lend your kids money at a high interest rate to teach them about borrowing and how you end up paying much more than if you saved. Likewise you could give them interest on money they save instead of spending to teach them about interest & compound interest. Not sure how it would work practically but it’s an interesting thought – pun intended :)
Our boys get 1 UAE dirham for their age each week (not so easy to do with NZ dollars as that would add up pretty quickly and parents may find they need to take out a second mortgage – but whilst this doesn’t apply to us we are running with it). They put their first coin in their Giving and Sharing money box which, as its clever name suggests, is given and shared as and when appropriate – the boys like to buy World Vision Smiles gifts with it. The next coin goes into their savings piggy banks – which can be dipped in to if they want to buy something “decent” (not sure what’s decent to a 4 year old). Their next coin goes into their wallet to spend on whatever they like. Jonah has one coin left and can choose where to put it. Ben does his in twos, with the seventh coin his “go anywhere” coin. Works well for us. They know that if they don’t have any coins left then tough! :) They were both really good about using their own money to buy Christmas presents this year, although we obviously topped this up a bit – there’s only so many $2 Shop type toys we grown-ups need! :)
I REALLY struggle with the idea of giving children pocket money for doing chores around the house, as I believe they should contribute to the running of the household regardless, and that pocket money and money management is a separate issue. Kent and I disagreed on this and had many discussions about it (before we had children!). I’d love to hear others’ thoughts on this.
I am wondering about certain jobs that they are expected to do for ‘free’ which would be basically their own stuff – clothes in the hamper, tidy up their toys etc. I think that a monetary value on doing optional jobs that are not just their own stuff like unloading the dishwasher containing the whole families dishes, vacumming communal areas or mowing lawns etc might teach them the principle of working for reward like a real job. Still pondering. I’ve also heard of a system where these optional jobs were rewarded with ‘screen time’ (tv, computer, gaming console etc) rather than money – not sure if I want to encourage my kids to spend extra time in front of a screen but it is an interesting thought that could possibly be adapted.
It was quite a while ago now (!) but when growing up, we got a set amount each week, then could add to it by doing extra chores ie. bringing Mum & Dad a cup of tea in bed on the weekend, or washing the car. We also got TV tokens and could cash in any unused ones at the end of the week – good way to limit TV watching and encourage us to watch less. Also, we had a money box for our sponsor child which we could add to however we liked. Interesting to read Angela’s comment on giving pocket money for doing chores – looking forward to hearing thoughts on this too.
I love the tv tokens idea, which could be used for all sorts of things! Brilliant.
And great to have a free-for-all money box for the sponsor child – I really do like the idea of having some completely voluntary outlet for giving (perhaps as well as a more structured thing if there’s a system like Jenny’s kids have).
The TV tokens is a great idea! I’m still thinking about how to make kids see the value in giving – it is important to my husband & I and is modeled and talked about to the kids but I’m still undecided on whether we should enforce or just encourage it once the kids have their own money.
I guess here’s a good place for me to come back and add that the boys do have chores to do in order to receive all their pocket money. I like your thinking though Angela, and agree that everyone should do their part in keeping the household running. Hmmm, that’s got me thinking. I’m not sure I want the boys getting money for nothing – we all have to work for our pay – hmmm. Perhaps as they get older and more responsible they can do other things rather than clear the table etc for their money???
In response to Angela and Jenny, thought I might post the first two rules from Love and Logic (rules 3 and 4 in the main post):
Rule One: children do not earn their allowances. That means we do not pay them to do their chores. Being paid for chores robs them of the dignity of holding up their fair share of the family workload. The only time we’d pay them for chores is when they do *our* chores.
Rule Two: Provide the allowance at the same time every week… [Put the cash and an invoice in an envelope and S]ign the invoice, ‘Because we love you. Spend it wisely and make it last.’
I sympathise with Jenny’s thought that no one else gets money for nothing. But I guess I tip more towards Angela’s feelings about not paying for family contributions. Paying kids for the basics is symbolic anyway, right? We don’t actually need to pay anyone to do that stuff, and we do want them to do it regardless of the money – they can’t opt out and choose to be unemployed and unfunded!
I think the problem is – as Angela says – that the two issues are separate but get easily put together. We want kids to contribute meaningfully to family life, and we want them to learn about handling money. But perhaps we could do both without ‘paying’ them for chores.
Is having two categories of chores an answer?
When I was growing up we had a bunch of things we did that weren’t connected to pocket money, and a few other things my parents would pay us for – optional, and genuinely helpful and needed, and things they’d rather not do! When I was at primary school I got paid $5 for mowing the lawns – a princessly sum in the 1980s, though for a very large lawn (including the elderly neighbours’ spare section!) – and ten cents a piece for ironing. Maybe 20 cents for shirts :)
Yes, it is a thoughtful discussion and one with many different outcomes – several of which would be good. I do fluctuate in my thought on this matter. I don’t think giving free money is necessarily a good idea and I do have a bonus scheme with the boys as well, where they can earn a little extra, especially if they are saving for something in particular. Yes, contributing to the running of the household is everyone’s responsibility and children should have age appropriate jobs which they do by themselves, probably related to keeping their areas tidy and assisting with meal times in different ways. I don’t mind paying for chores, though, not that I think it is the best way to do things necessarily. As a youngster I wasn’t taught about the value of money or of work. So much was free and given and I felt I was entitled to these things without earning them properly. Now, I value work and am happy to work hard for money and work extra hard for extra money.
Managing money is quite a different game now compared to what it was for my parents and their generation. Then, you studied, you got a job you contributed to your pension and you were, in general, sorted.
Now, you study, you work in a low paid job for a while, you take part time job/s until you can get the one you are best at. You need to invest wisely, You need a secondary and even a tertiary income to meet ends and so on .You need to make your own provisions rather than expecting a scheme to provide. It’s harder work that it was and requires cleverness to succeed at. Unless of course you are in IT!
I would like my boys to be familiar with money, and to manage it wisely. I wasn’t given that advice and have suffered because of it. New principles are needed for this generation. I don’t know what they are. I give the boys some pocket money and they do some jobs to ensure it’s not too free. If they don’t do their jobs, they don’t get all their money. As they get older this may change. As I read more posts like yours, it may change, too! Thanks for writing.
I’ve been thinking heaps about this today! Having had heaps of conversations about this with Kent (we disagreed) I’m not sure anything will sway me regarding my feelings of not paying my children to contribute to the running of the household. I think Kent and I may have reached a compromise by paying them to do bigger, less-expected-of-children chores (such as the classic, mowing the lawns), but I am still not keen on this. I remember my brother happily climbing the scaffolding and painting the house with my Dad, and I think the attitude toward this kind of task would change if money was involved.
I do believe children need to learn about money. It’s just my feelings regarding household contributions are very strong. Here’s what went through my head today:
1. My brother and I were given pocket money, not for doing chores. When we became adults looking for work and moving out of home, etc etc, we had no trouble whatsoever understanding and coping with the fact that we had to work for money.
2.When given pocket money “free,” children still learn about spending/saving/giving/wanting things they can’t afford just as effectively. These to me are the most important lessons regarding money.
3. Of course, learning about working for money can still happen before you HAVE to work. Teenagers can do paper rounds, cut the trees for the neighbours, sell lemonade on the street corner, get a part time job at the local dairy etc and learn some wonderful lessons.
There are many, many lessons about life that I want my children to learn but I’m happy for some of them to come later in their child/teenagehood.
4. The issues of pocket money and “building financial literacy” don’t have to be the same thing. Pocket money is one way to do it, but not the only way. I would like my children to have a good understanding of the household finances when they are teenagers – to know abour our income, to see a list of expenses, to learn about our budget. I already do this a little with our three year old. Sometimes before we head out the shops, particularly if looking for less crucial items, I say, “let’s just have a look on the computer and see if we have enough money.”
5. I have not given a lot of thought to how to teach my children to give away their money, though having only ever worked in the not-for-profit sector, giving is something I have thought about a lot. I just can’t help feeling that parents demonstrating giving in their lives will be at least as significant, or perhaps even more so, than them telling their children to give their money away. I may be wrong, and would love to hear your experiences.
Thanks Thalia for giving us a forum where we can comfortably disagree without it becoming a “war.”
I REALLY like the ‘let’s look on the computer and see if we have enough money’ idea. Brilliant.
Angela, you are such a clear writer. So gentle, too!
I do like what you said about some lessons waiting until later, such as earning money through part time jobs. I see you points about children contributing to the family for free and think they are very strong. Thank you for sticking to them.
I agree that parent role modelling giving money will be far more effective than simply telling children they should. My father passed that on to me. I guess our boys have learnt to divide their money three ways (giving (first) , saving (second) , spending (third)) simply to learn that you needn’t (shouldn’t?) spend all your money as soon as you get it, which is a very natural thing to do. I bear in mind a few principles when talking about money with the boys:
1. Having money is good and a blessing that not everyone shares.
2. Thinking carefully about how we use our money is important.
3. Money is a finite resource we gain through work (in general). It should not be taken for granted or wasted.
4. As much as we should manage it carefully, we should hold onto it loosely and avoid it causing stress or conflict.
It’s good to be talking about this. It is possible I change some of the ways I do things as a result. ;)
Please, keep replying.
I’m pretty sure there’s a joke in there somewhere about loose change in point number 4.
How does skaterak get such important looking dark grey background?
It’s a very good question. I think the shading is random, though partly to do with nesting replies.
Ooh, unless it’s cleverly shading according to how dark it is in his part of the world right now? No. Then we’d all be dark grey. Hm. Should look it up, really…
[…] other hand, I have really enjoyed reading two of the Love and Logic books that I mentioned in the pocket money discussion. In this parenting philosophy you don’t force your kids to do anything, really. You give them […]