Along with all the other responsibilities that parents have, is the need to teach children about money.
For many moms and dads there will come a time when they must decide whether or not to give pocket money and if so: At what age, and then how much?
Certified financial planner Kirsty Scully sat down with Cape Talk's Sara-Jayne King to share some tips and advice when it comes to pocket money.
Giving kids pocket money is the first step towards teaching them the value of money and learning to manage it wisely. It’s a great opportunity to learn about budgeting, investing and saving money.— Kirsty Scully, Certified financial planner - Core Wealth
So when should parents start to give pocket money?
Children as young as 5 or 6 can start to understand the value of money. So definitely by the time a child is going to Grade 1 you can start with pocket money.— Kirsty Scully, Certified financial planner - Core Wealth
Scully says there are different methods of paying pocket money and deciding how much to give.
1. A reward system This is an ideal system for children under the age of 8. They need to help with simple household tasks at home. Children under 8 can do tasks such as sorting the clothes washing into different colour piles, simple cooking, and help with drying the dishes. Note, these are tasks to help the family. They are not personal tasks such as keeping your own bedroom tidy because they should be done without having to pay them anything.
An income system For older children, starting around 10 years of age, you can introduce a system where they are paid for doing additional jobs such as cleaning the swimming pool, clearing out the gutters before winter starts or babysitting.
- An allowance system
This is best for older teenagers. They continue to have responsibilities, however, you pay them a higher basic pocket money amount which needs to then be used for payment of essential things such as clothes, toiletries, transport, and entertainment. At this stage it gives them the opportunity to manage a budget.,
As the child gets older, I would recommend that they move on to being paid their pocket money on a monthly basis. This can be done at the end each month and will then teach them how to learn to ‘stretch’ money out over a month, just like we as adults have to do.— Kirsty Scully, Certified financial planner - Core Wealth
So just how much pocket money is a wise amount for parents to give their children?
This is the million-dollar question! This decision is going to vary from family to family, but do realise that there will always be another child who is getting more than your child - or so you will be told by your teenager! And always remember that how much you give is going to depend on what you are expecting your child to buy with this money.— Kirsty Scully, Certified financial planner - Core Wealth
Listen to the full interview below: