How should I manage my child's pocket money: Is $5 too much or not enough?

This post is sponsored by the Commonwealth Bank of Australia.


When I was a kid, my father’s pocket money program worked thusly:

On Sunday evenings, children would receive ten cents per year of their age every week, as long as all jobs were done, behaviour was acceptable, and Dad remembered. And had the right change.

Still, more often than not, we were paid our pocket money, and a ten year old in 1977 could buy an ABBA single (on vinyl) for a dollar.

Not being a whiz at maths, I was thirteen before I worked out that on Dad’s system, I’d be twenty before I cracked the two dollar mark. Helpfully, I pointed this flaw in his system out to him.

He replied by saying that by the time I needed more than $1.50 a week I’d be old enough to get a job and earn it myself.

My kids are 11, nine and six years old. I use an updated version of my dad’s system. I halve their age and they get a dollar equivalent of that figure. So Ben gets $5.50. I pay it after our Sunday afternoon ‘hour of power’ when the tip that is our house is blast-tidied in preparation for the week ahead. What they do with that money is largely up to them, but I do encourage them to save a bit, spend a bit, give a bit away.

My friend Lou, a teacher and the mother of four sons is the person I turn to for advice on such things. When I asked her about pocket money, she said, ‘Whatever you do, don’t let them hoard it while you buy them ice-creams after netball. If they want a snack at the shops or something beyond the minimum you want to pay, they have to cough up.’

‘Really?’ I said, ‘What about saving? Shouldn’t we be all about saving?’

‘They can do that too,’ Lou said, ‘But you don’t want them to be sitting on savings of hundreds of dollars and still pestering you for a Slurpee when you stop for petrol.’

There are a couple of questions swirling around how should I manage my child’s pocket money.  No one knows the absolutely right answer to any of them, but they’re interesting and important to talk about.

At what age should pocket money begin?  My thinking is when they start school. It’s a bit different for the youngest kids if they see older siblings slashing the cash, but as soon as they are aware of money and that you need it to buy stuff, it’s worth starting the conversation. Of course every family is different – some might not have the means to give kids a discretionary income. It’s okay to say, ‘No, not yet.’ Don’t be swayed by teary tales of what everyone else does.


Should kids contribute to essentials, like things for school? Tricky. Generally, I’d say no, but for example, if my daughter needs headphones for school and I can get a set at the supermarket for $6 but she wants some $19.99 hot pink ones; then a contribution from her pocket money can make up the difference. Similarly with clothes – as a parent it’s my responsibility to buy my kids clothes, but if they want to upgrade their plain jeans to a funkier brand, then they need to dig deep.

How do you monitor how it’s spent? I think you need to put a bit of trust in the kid. You might not think a One Direction calendar is a sensible use of $8.99 but it’s her money. As long as she realises it’s $8.99 she won’t be able to put towards the concert tickets she’s saving for. You can buy clever money boxes divided into sections labeled ‘spending’, ‘saving’, ‘gifting’ and a locked compartment labeled ‘wealthing’.

‘Wealthing’ is different to saving, as the idea is to never spend it. Not even on a bike or an Xbox or a pair of whatever the coolest sneakers are.  It’s the capital. That money is banked initially in a simple savings account, to form the basis for a good, old fashioned nest-egg.

Should pocket money be linked to punishment? Again, a woolly one. Although I will say that once I started docking payments to cover the cost of lost water bottles, far fewer go missing.

Physical money or digital? Like lots of parents, my sister pays her 13 year old’s money directly into his savings account. As with many things, my sister and I differ on this one. I know that I am more careful with cash than invisible (or plastic money) and I think when kids are young, the tangibility of cash helps them understand that when it’s gone it’s gone. Half in cash and half paid into an account could work.

Compromise, thy name is parenthood.

As Australia’s leading financial institution, the Commonwealth Bank is committed to helping young 

Australians develop strong money management skills and form sensible saving habits that can last a lifetime. Along with a range of savings accounts, including one designed especially for under-18s, and their well-established School Banking program, they offer a diverse range of initiatives designed to promote financial literacy. For more information visit their site.

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Did you get pocket money as a kid? If you’re a parent, how was it handled in your family?