New Year, New Start – and a great time to introduce a new pocket money routine
Pocket moneyis a brilliant way to help your children learn about managing money. It can kick start conversations about budgeting, saving and working for rewards. If your children have been given cash for Christmas, they can add pocket money to get closer to big savings goals. And it’s all pretty easy to do during the pandemic.
Plus, by letting kids make their own mistakes with small amounts of pocket money, they can hopefully avoid bigger financial mistakes in later life. If blowing cash on chocolate means you can’t afford a longed-for Lego set, it can leave a lasting impression!
We spoke to Faith Archer ( mother-of-two, personal finance journalist and money blogger at Much More With Less ) about how she plans to use the new year to refresh her pocket money routine…
Deciding how much to give
My New Year’s Resolution is to review the amount I give. It’s tricky to know how much to hand out, but RoosterMoney has tips to help decide and useful research on how much children get at different ages.
I’ve been giving my two pocket moneysince they were very young. Even a four-year-old can have deep desires for penny sweets or Pokemon cards. Small children soon learn that different toys cost different amounts, and that by not spending this week, they can buy something slightly bigger next. But if you’re not comfortable handing out cash, you can start with a reward chart or star system instead. Check out this post for info and a free reward chart template.
New Year's Resolutions
Pocket money can also help get the kids involved with other New Year’s resolutions.
Personally, I dole out a basic pocket money which isn’t dependent on doing chores (although I have threatened to withhold pocket moneyif they are particularly fiendish). But you could link pocket money in 2021 to helping out around the home, such as getting ready for school on time, laying the table or keeping their bedroom tidy.
I am willing to pay my kids for extra work, such as washing the car or cooking meals (microwave mug cakes don’t count). One of my New Year’s Resolutions is to get to grip with our garden, so I’ll offer my kids extra pocket money for weeding and raking up leaves on the lawn.
Keen to get homework done in time? Offload the ironing? Cover babysitting while you’re taking all that exercise you’ve resolved to do? Try some pocket money incentives. If you need inspiration, the RoosterMoney Pocket Money Index includes lists of common chores and top-earning chores. The only problem comes if they go on strike, because they don’t fancy the task, or reckon they’ve made enough already…
Feature focus: Set a routine for 2021 with your children with Chores. Whether you want to link it to what pocket money they earn, or reward them as and when they’re done, the Chores feature was built with flexibility in mind to support your family’s needs.>> Learn more about Chores <<
Teaching children to save money
Perhaps one of your resolutions is to help your children learn more about money.
I’ve always been keen to teach my kids to save, but using the RoosterMoney app for the last six months has made a massive difference. Before, when I was a bit haphazard doling out pocket money, my children were keen to spend it as soon as they got their hands on it.
But with RoosterMoney, they know I can’t forget. Their pocket money is magically added once a week, they can see their balance adding up, and they can track progress towards any savings goals they’ve set. Basically, I think they trust RoosterMoney more than me.
In fact, my kids have learned to save so well that they use it against me. I’ve always told them to save up for something they really want – but when they did, it wasn’t something I really wanted.
I wasn’t keen to buy my son the Nerf gun he found in a charity shop – so he asked to take money out of his RoosterMoney ‘Spend’ pot instead. My husband and I didn’t want to give my daughter a games console, but we agreed to match any savings she made, thinking it would take her ages to raise her half. Then she co-opted her brother, combined recent handouts from generous grandparents, and they hit the target way sooner than expected. Now they’re saving towards new games.
Using pocket money to encourage kids to budget, save and do chores you’ve resolved to do – all ways to get 2021 off to a great start!
Feature Focus: Help your kids set Goals they want to save up for in 2021. Whether they want a tablet or another lego set, they can create visual targets in the Goals pot where they can transfer their pocket money towards and track progress to reaching their goals!>> Learn more about Goals <<
If Faith’s approach has inspired you and you’re thinking of starting a new pocket money routine in 2021, here’s a quick checklist of things you may want to consider...
- Giving pocket money in exchange for your children completing chores can be a great way to reinforce that money is ‘earned.’ Getting paid for work can be hugely rewarding and it will also make your children think carefully about how they spend it.
- Remember to be clear what chores are pocket money worthy versus things that you expect them to be doing as part of the family. If you need help on deciding how much to give, check out our article on the average pocket money given by age.
Use a Reward Chart
- This can be a brilliant way to get your children going with pocket money, as well as incentivizing them to help around the house. You can either pay by chore completed, chore earned or only give an agreed pocket money amount if all stars or chores are completed.
- In our experience, children love to see the progression that reward charts give them. We created our own here!
For younger children:
- Awarding your children for good behavior is something popular with parents of younger children on RoosterMoney. While this can be hugely effective, it’s important to keep it positive. Many parents use the threat of not getting an pocket money as a means of getting their children to do something.
- We don’t recommend taking pocket money off them as this doesn’t encourage children to save carefully for fear that their hard-earned cash may be raided!
For older children:
- Incentivize positive saving behaviors by rewarding them for saving. With RoosterMoney, this could be by adding an interest rate on their save pot so they can earn extra over time. Or like Faith, you can agree to match a saving amount to help get your child to their goal quicker.
Only give gifts on special occasions
- Everyone loves a gift and of course, receiving some unexpected money. However, avoid the temptation of giving your children pocket money like this frequently- you may end up spoiling them and undoing all that good work your pocket money routine is doing!
- If you or their grandparents do give them some cash, make sure that you add it to their overall pocket money, encouraging your children to think about what they will do with it.
Encourage your children to allocate their pocket money
- At RoosterMoney, we encourage kids to divide their money between goals for things they want to get and a savings pot, to put something aside.
- Getting your children to think about what they do with their pocket money is an important lesson in budgeting and will help them understand that you need to cover short-term, as well as long term goals by putting some spending money aside. By requiring this as one of the conditions when you give them pocket money, you can reinforce the habit from the outset!
- And if your kids have subscriptions or are paying towards things in the house, with the Regulars feature you can help your child budget their pocket money towards those things they’ve committed to pay for.
Make it fun and make it stick!
- The mantra at RoosterMoney! Everyone finds banking dreary, something we think should change- which is why keeping it fun for the whole family is really important.
- Whether it’s decorating a reward chart, setting challenges for yourself as well as the children or making sure everyone is involved in decisions about the best value lego… This will ensure that your children are fully engaged in the pocket money process, which hopefully helps them get set up for 2021 and beyond ?
For more information on how best to use RoosterMoney for your pocket money and chores routine, check out our feature pages here.