I’m all in favour of giving children pocket money. It’s their first taste of financial independence and it teaches them many lessons for life, including how to budget, how to save, how to set a goal and how to manage their money.
I also believe in increasing the amount by a dollar or two each birthday, acknowledging that the older a child is, the more ‘refined’ their tastes.
But what happens when your child is a teen and old enough to work?
In my experience, most teens welcome the chance to supplement their pocket money with money they’ve earned themselves. It’s up to us as parents to support them as they take this crucial step towards financial independence. Part of that support perhaps means carrying on with pocket money for a while, so that the income from their first Saturday job is ‘as well as’ and not ‘instead of’ the money you give them. After a month or so, if the Saturday job is going well and they are enjoying having cash to spend and even managing to put money aside for bigger ticket items, you’ll probably find that your teen no longer wants or expects the hand out.
Earning your own money is a part of growing up
Finding a job empowers teens and gives them a sense of self-worth. For the first time in their lives, they aren’t reliant upon the generosity (or good mood) of their parents in order to buy the things they want. Along with that comes the realisation that if they save up, they can afford to buy things for themselves that their parents wouldn’t have paid for outside of Christmas or birthdays. It’s a valuable life lesson; when you earn your own money, everything’s possible!
Joining a grown up world
For many teens, a weekend job is the first time they’re treated as an adult among adults, and are paid for the adult qualities they possess (reliability, sociability, efficiency). There’s no faster way to grow up than being thrown into an environment where people assume that you already have! As parents, you’ll almost certainly notice a difference at home. It’s exciting and rewarding to meet the adult your teen is becoming.
Saving comes naturally
Newly employed teens will readily admit that it’s much easier to waste pocket money than money that you’ve worked hard to earn. When you know how many hours it’s taken to earn a pay check, you tend to be more careful about how you spend it. Budgeting and money management are a direct result of this awareness, and probably come as a relief to many parents. If you want to help, this is a good time to help your teen get into the habit of saving some of their money as well in their bank account. The CommBank Youthsaver account offers no monthly account fee and no withdrawal fees when you use Commonwealth Bank ATMs and branches. The Youthsaver account pays bonus interest each month you make at least one deposit, like your pay check, and no withdrawals. It also gives you access to your funds whenever you want, including Keycard access for over 16 year olds. For more information about this account, click here.
And when you see they’re on the road to financial independence, you can quietly, unobtrusively, stop the pocket money.
Important Information: The above article contains general advice. It has been prepared without considering your objectives, financial situation or needs. Because of that, you should, before acting on the advice, consider its appropriateness to your circumstances.
Lyn McGrath is the Executive General Manager of Retail Sales for Commonwealth Bank, but more importantly she’s the mother of two.