Pocket Money: The Pros and Cons Every Parent Should Know

Pocket money has long been a talking point for parents. Some see it as an essential part of teaching children responsibility, while others worry it encourages unhealthy habits. So, should you give your child pocket money?

Advantages of Pocket Money

1. Teaches Responsibility: When children manage their own money, they learn that resources are limited. They have to weigh up choices and deal with the consequences — a vital life skill.

2. Builds Budgeting Skills: Pocket money introduces the basics of budgeting. Children learn to balance what’s coming in (allowance) with what’s going out (spending). Even small weekly sums can spark big lessons.

3. Encourages Saving Habits: Having regular pocket money allows kids to practise saving for bigger goals — like a new game or special outing. This helps them develop patience and understand the value of waiting.

4. Offers Safe Mistakes: It’s much better for children to make financial missteps with £5 than £500 later in life. Buying something that breaks quickly, or spending everything too soon, teaches valuable lessons without lasting harm.

5. Boosts Independence and Confidence: Children feel proud when they can make their own decisions about money, even if small. That independence builds confidence — and gives them a sense of control.

6. Connects Effort to Reward (if linked to chores): For some families, pocket money is tied to household tasks. This helps children understand the link between effort and earning, preparing them for working life.

Disadvantages of Pocket Money

1. Can Create Pressure: Children might compare allowances with friends and feel pressure if they receive less. This can sometimes cause tension or feelings of unfairness.

2. Risk of Entitlement: If pocket money is given without boundaries, children may come to expect money as a right rather than something to be managed responsibly.

3. May Encourage Overspending: Without guidance, children might fall into the habit of spending pocket money immediately rather than thinking carefully about purchases.

4. Family Disagreements: Siblings may argue about differences in amounts, or about whether chores are “worth” the pocket money offered.

5. Doesn’t Always Teach Real-World Value: If the allowance is too high or unrelated to effort, it may give children a false sense of how money works in the real world.

Smartmonies Tip for Parents

The key is balance. Pocket money works best when:

• It’s consistent (e.g. weekly, same amount).

• It’s discussed openly (let children help decide what’s fair).

• It’s paired with guidance (encourage saving, talk through spending).

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You might also set rules like saving a portion each week, or matching your child’s savings as a reward for good habits.

Final Thoughts

Pocket money isn’t just about giving your child coins or transferring money onto a card — it’s about providing opportunities to practise real-world financial skills in a safe, supportive way.

Used wisely, it can be a powerful tool to teach budgeting, saving, and independence. But it’s not without its challenges, so families should find an approach that fits their values and budget.

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