By Clare BruceThursday 10 Nov 2016Hope MorningsParentingReading Time: 5 minutes
Listen: Families expert Dr Justin Coulson talks kids and pocket money.
Your seven-year-old comes home asking if they can have pocket money like all their school friends. Do you:
- Reluctantly say yes, and start a rewards system linked based on chores and behaviour?
- Hit the shops and let them spend $100 on anything, now they’re growing up?
- Procrastinate, then call their best friend’s mum and do whatever she’s doing?
- Agree, set up a bank account, and start teaching them about savings and charity?
- Panic, thinking, ‘Oh no, my baby’s growing up!’?
No matter which response you chose, they’re all understandable. But they’re not all useful, says family and parenting expert, Dr Justin Coulson.
In a chat with Hope 103.2’s Emma Mullings, Dr Coulson shared some tips, based on psychological research, on what he believes is most helpful approach to pocket money.
How Old Should Kids Be to Get Pocket Money?
If you want to follow the crowd on this one, most parents introduce pocket money to their children around the age of six, according to the Journal of Economics Psychology.
But if you’d rather wait until a more developmentally appropriate time, it’s probably best to wait until the age of about 7, when they’ve started to understand a little basic mathematics, says Dr Coulson.
“Kids under about 6 or 7 don’t really understand the way money works,” he said. “They’re still learning about maths. If you’ve got a 5 or 6 year old, [and you give them] two twenty cent pieces and a ten cent piece, they actually get more excited [than if they had] a dollar coin, because they’ve got three coins instead of one.
“So we don’t want to start them on it too early because they just don’t get it.
“I’d say around grade 1 or 2, hand over the pocket money. And start with something small.”
Set Guidelines For Spending, Saving—And Giving
Many parents believe their children should be able to spend their pocket money in whatever way they choose. But in Dr Coulson’s view as both a researcher and a parent-of-six, it’s better to help them learn wise financial practices, by setting a few guidelines.
He suggests teaching them to divide their money into three or four categories: Long term savings, medium term savings, and spending money—and a fourth category, in some families, might be giving to charity.
You may choose to use piggy banks or money boxes, or set up an account with a bank (such as a credit union) that offers sub-accounts or ‘buckets’ within the one account.
“We encourage our kids to put away 10 percent as a charitable donation.”
“It’s really nice to have savings that just keep on accumulating, and it’s also nice to be able to throw some money on something at the tuck shop,” Dr Coulson said. “But also have a portion that they save, that they can actually spend when they get enough. Maybe they want to save up for their favourite book or toy.
“That teaches the kids that it’s not just all spending it on a quick fix, or saving it forever. There’s also that third category.
“A lot of families have a fourth category as well, and I do this in my family, we encourage our kids to put away 10 percent as a charitable donation in one form or another. We really want to encourage them to recognise that they’ve been given a lot, and there are other people who are needier than they are.”
Should Pocket Money be Tied to Chores?
There’s a wide range of views among parents as to whether pocket money should be used as a reward or ‘payment’ for household chores, and keeping bedrooms tidy.
Dr Coulson’s view, which is matched by other family psychologists such as Dr Kevin Leman, is that it’s not a great idea. They believe it undermines family togetherness.
“When you’re a part of my family,” says Dr Coulson, “there’s an expectation that you’ll just make a contribution to how the family runs, and how the family works. And you shouldn’t be paid for that.”
“Research shows that when you pay somebody for doing something, their motivation for doing it actually decreases.”
Payment for chores also backfires in the long run, making a child ultimately less motivated about the task.
“Research tells us pretty clearly that when you pay somebody for doing something, their motivation for doing it actually decreases,” Dr Coulson said. “They start to say, ‘What do I get if I do it?’
In other words, the child will start to require – even demand – a reward.
“I don’t want to have to dip into my pocket every time they go and tidy their room,” Dr Coulson said. “They should tidy their room because I’m providing them a room in my house, and it’s part of being in a family in a home, that you tidy your room.”
Why Pocket-Money-For-Chores is Counterproductive
And for parents who want their child to do a good job at their tasks, this insight from Dr Coulson may be the clincher: rewards encourage slackness.
“When we reward kids for doing stuff – and it’s the same for some adults – they tend to focus less on what they’re doing and more on what they’re getting,” he said.
“Which means, if mum tells you, ‘Go and tidy your room and I’ll give you five bucks,’ you tend not to do a very good job. You just move everything off the ‘floordrobe’ and stick it under the bed, or shove it in the cupboard, or throw it all in the dirty wash basket, even though it’s not dirty. Kids will take as many shortcuts as they can, to get the goodie as fast as they can. So giving them rewards for chores actually backfires. It undermines their interest and they do a shoddy job.
“It’s much better to say, you’re part of a family, just help out, because that’s what we do in our family.’”
Give Allowance so Your Child Can Learn About Money
The fundamental question parents need to ask themselves about pocket money, is why they are giving it to their children.
“I give my kids pocket money so they can learn about money and how it works,” Dr Coulson said, “not for doing jobs.
“I want my kids to grow up knowing that you don’t ‘work for money’. I want them to grow up learning that you do something you love, because it’s worth doing, and money can be a by-product of that—and you just need to learn how to use your money well.
“Whether you’ve got a little bit or a lot, it doesn’t matter, it’s what you do with it that counts.”