advantages of pocket money essay

Pros and cons of pocket money – is giving an allowance a good idea?

Our money expert explores the benefits and drawbacks of pocket money and whether kids should have to earn the money they are given

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Pocket money can be a great way to teach children about the value of money and money management, but it has both its advantages and drawbacks.

Experts say giving your child an allowance can encourage them to take responsible decisions and build independence, and right now, teaching your kids about money has arguably never been more important. 

You can also use a pocket money app to encourage your children to develop good money habits and then, as your offspring get older, you can look for the  best bank accounts for kids . 

Co-founder of money app GoHenry, Louise Hill , says: “It doesn't matter how much you give – it can be 5p or £5 – but the act of paying regular pocket money helps open up conversations around money, and gets children thinking about the four key pillars of money management: spending, saving, earning, and giving.

“You can help kids understand where it comes from; why it's important to save; that when it's gone, it's gone; and the role donating to people less fortunate plays in society. This is even more important as we move to a cashless society and children don’t see physical money exchanging hands in the way we used to.”

Pros of pocket money

According to GoHenry’s Youth Economy Report 2022 , the average pocket money received by children in the UK is £7.62 a week. Most parents increase pocket money with age, with seven-year-olds typically receiving £3.52 a week, 10-year-olds £4.58 and 16-year-olds £13.32.

But regardless of the amount, there are numerous advantages to giving pocket money.

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1. It teaches children about money management

Having a set weekly allowance will help your children learn to prioritise and budget for the things they want. It will also teach them that their supply of money is finite.

Claire Saunders, certified financial coach at Mint Coaching , says “Pocket money is usually the first opportunity children have to learn and understand the value of money and to navigate financial responsibility. By receiving regular pocket money, children can make choices as they learn how to save, budget, and make spending decisions.” 

2. Children can learn about earning money

Understanding the link between money and work is a vital part of kids’ financial education. For young children who aren’t old enough to get a part-time job, paid tasks can be a good introduction to the world of work.

Some parents might also tie pocket money into rewarding good behaviour. Dani Kumrou, mum to 12-year-old Ellie-rose and user of GoHenry, says: “When Ellie-rose was really young we had a reward chart where she’d get stickers for doing things like putting her toys away, eating her fruits and vegetables, playing nicely and sharing with her friends. We would then give her pocket money so she could save up and buy a new toy. So, she learned from a really young age that good behaviour pays rewards, and you should always be good and kind.” 

3. It can help get your kids in the savings habit

Parents should encourage children to save a proportion of their pocket money for future large purchases – this can teach them about delayed gratification. You can encourage them to save by paying ‘interest’ on the money they put aside, or matching their savings for specific items. 

Dr Lily Canter , a journalist and mother-of-two, says: “I have been giving my boys pocket money from a young age. They both got it from age six and they get £1 a week. It has really helped them to understand the value of money. If they want a magazine, toy or treat for example they have to buy it.

“They both got savings accounts at seven and top this up with their pocket money regularly. My eldest bought himself a laptop at age eight with the money he had saved from pocket money and birthday money from relatives.”

4. Children can apply maths skills to everyday life

Unfortunately, personal finance isn’t widely taught in schools. But maths is. By giving your kids pocket money you can tie the two subjects together and show your children real life examples of maths at work. 

With young children, this can mean helping them calculate how much they will have left after spending some of their money. For older children, you might increase their pocket money in line with inflation or by a percentage.

Cons of pocket money

While there are numerous benefits of pocket money, there are significant disadvantages that should be considered.

1. It can be hard to spare the cash

If you’re strapped for cash at the moment, you might struggle to fit pocket money into your household budget.  You might also think twice about giving your kids money if you think they will just fritter it away.

If you don’t have much money to spare, don’t feel pressured to give your kids a large amount. Even a pound or two a week can give young children the feeling of independence.

2. Some children might waste their pocket money

Without the right advice about money, some children may spend it as soon as they get it, rather than saving. They might also spend it on the ‘wrong’ things.

“There’s potential for teenagers to spend their pocket money on unhealthy or risky purchases – think alcohol, cigarettes or excessive amounts of junk food. A good way to manage this is to open up an app or account such as GoHenry, Natwest Rooster or Revolut, rather than giving them cash,” says a MoneyExpert spokesperson, “This way, you’ll have a better idea of how their money is being spent, whilst still giving them the financial freedom they need to learn.”

3. Watch out for entitlement

If your child doesn’t have to work for their money, he or she might develop a sense of entitlement, rather than realising money has to be earned. This could be the case if you are particularly well-off or give your kids an above-average allowance. 

Goodto.com's Money Editor Sarah Handley says: "While your intentions may be generous, if you give your children too much pocket money it could harm their long-term relationship with money. They could be less motivated to earn their own money in the long run, or not fully grasp the idea and sense of achievement of saving up for a bigger purchase."

4. Money can provoke jealousy

Most parents increase the amount of pocket money they give their child as they get older. But this means older siblings get more than younger children – which can cause tensions. 

Jealousy around money can be even more tricky outside of your family. Can your child cope with having more or less money than their friends? If this is of concern, it could be helpful to ask around to find out the going rate for pocket money in your child’s class.

Should children have to earn their pocket money?

According to a study by Halifax , more than four in 10 (44%) parents think children should only get pocket money if they do chores. But, perhaps unsurprisingly, more than half of children (55%) feel they should be given money, regardless of whether they do anything to earn it. 

“Some parents believe that chores are a natural part of family life, and children should contribute to the household without monetary incentives. Others think that paying children for doing chores teaches them the importance of hard work and responsibility,” says Claire at Mint Coaching. 

“In our family, we have chosen not to link pocket money to chores, as we believe helping round the home is a responsibility for the whole family. However, we might choose to pay our children if they are doing a ‘job’, that is outside of what we consider to be regular chores, such as cleaning the car.” 

Emma Lunn is a multi-award-winning journalist who specialises in personal finance and consumer issues. With more than 18 years of experience in personal finance, Emma has covered topics including all aspects of energy - from the energy price cap to prepayment meter tricks, as well as mortgages, banking, debt, budgeting, broadband, pensions and investments. Emma’s one of the most prolific freelance personal finance journalists with a back catalogue of work in newspapers such as The Guardian, The Independent, The Daily Telegraph, the Mail on Sunday and the Mirror.

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Should children get pocket money? Is it good for their education and development?

Source: Carissa Rogers' image

Allowances are often seen as a good way of teaching kids about money. We debate whether children should get pocket money, and under which conditions. 

Should children get pocket money?

Many parents give pocket money to their children. These allowances are handed over either on a regular basis or as a reward for certain tasks or accomplishments. For many pocket money has an educational purpose: children can learn  the value of work, as well as  how to save and manage a small budget. Thanks to pocket money parents also incentivize their children's chores . However pocket money was not always a common practice. It became popular in the 1940s 1950s.  Today many parents don't believe that giving pocket money to their children is that beneficial and that each family should have its own appropriate reward system for children. Psychologists and experts are divided on whether pocket money is good for children. 

Pros and cons of pocket money

Some of the main advantages of giving money to children:

• Children realize that they have to save and wait until they can buy the things they want. M anaging a tight budget is a good training for their future lives. 
• Since children have a limited budget they learn how to prioritize, chosing the toys and items they want to purchase most. 
• Pocket money as reward can teach children the value of work and appreciate more the things they have purchased with the money they have earned. They can learn about delayed gratifications which is a valuable skill in life.
• When pocket money is associated to chores or tasks, children are more motivated to carry them out. They may perceive these small jobs as an opportunity to be rewarded and not as a burden.
• Pocket money may help children become more independent .

However there are also some disadvantages :

• If children receive money on a regular basis, like for example if they get weekly allowances, they may get used to it and believe that it is an acquired right. Kids can be disappointed or frustrated when they don't receive pocket money. 
• Pocket money may send a wrong signal to kids. When pocket money is handed over on a reward bases children may think that they deserve payment for anything good they do. If children get allowances for helping with housework, completing their homework , getting good grades or simply behaving well, they may not understand that these are their duties. Children need to understant that they should do many things without cash rewards. 
• Introducing many material rewards can be detrimental for children's development and generosity . It is important that they learn to appreciate other type of gratifications (moral, ethical or psychological). Children should learn how to find pleasure on doing good things and helping others. 
• If allowances are not properly defined, in terms of quantity, timing or tasks to which they are associated, tensions may emerge between children and parents . 
• Culture of consumption : If cash rewards are too big children may waste the money or end up buying too many unnecessary things. 

Do you think giving pocket money to children is a good idea? Did you receive pocket money when you were a kid? Do you give cash rewards to your children? How often? Under what circumstances?

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