Pocket Money

Receiving regular pocket money can help children learn the benefits of saving, while earning it by doing chores can teach them the value of money. But as a parent or guardian, it’s up to you how much – if any – pocket money your children get.

What age should I start giving pocket money?

When you start giving your child pocket money is a personal choice. Many parents start giving their children a small allowance at around four or five years of age. Others wait until the child is nine or 10. Whenever you start, it’s important the child understands how much he or she is getting and how often that will be. As a rule of thumb, your child is ready to start managing pocket money if he or she understands these three basic truths:

• You need money to buy things
• Saving money will allow you to buy more expensive items
• If you spend all your money in one go, there will be no more until the next “payday”

How much pocket money should I give to my child?

In the UK, kids typically receive around £5 a week in pocket money, according to a recent survey of family-finance app RoosterMoney users. Most families pay older children more. But how much you hand out in pocket money will depend on both your parenting style and your financial circumstances. Never be pressured – by your children or other parents – into paying more than you can afford.

Top Tip

If you can’t afford to give your child pocket money, try using homemade tokens to allow them to save up for an activity, such as a family picnic in the park.

When should I give pocket money?

Paying your child pocket money on a set day each week or month will prepare them for earning a wage later in life. Try not to supplement it or pay in advance because they have run out of funds; the aim is to teach your child not to overspend. You can withhold pocket money as a punishment. However, child psychologists advise against taking back any money you have already given, as this can discourage saving.

What is pocket money for?

Pocket money is often used to cover small purchases, such as sweets and toys. It can also be saved towards the cost of a more expensive item, such as a new bike or video game. Again, however, what pocket money is for is up to you as a parent. Some people teach older children about budgeting by giving them a larger amount that also has to cover outgoings such as school lunches, magazine subscriptions or mobile phone bills. Either way, letting a child make the odd mistake when it comes to spending their pocket money is an important part of the learning process.

Should pocket money be linked to chores?

In some families, everyone has a list of age-appropriate chores to do. In others, children don’t have to start helping around the house until they are well into their teens.

So once again, whether your child has to do chores to earn pocket money will depend on how your family functions. If you do decide to link pocket money to chores, it’s a good idea for the chores to be regular – for example, putting out the bins each week. It’s also important to explain the chores clearly so there’s no confusion or arguing about what needs to be done and when. Another approach is to pay extra pocket money for completed chores at a rate of say £1 per chore.

Here are 5 common ways to earn pocket money:

• Washing the family car
• Putting the bins out
• Gardening
• Mopping the floor
• Making the dinner

Why not take this opportunity in Talk Money Week 2021 to discuss pocket money with your child.

Welfare Advice Case Study

A scheme co-ordinator contacted our Welfare Advice service and asked that we do a benefit entitlement check for a tenant residing in a sheltered scheme. Our adviser contacted the tenant and gathered information about her circumstances.

The tenant is single. She claims State Retirement Pension (SRP) and has an occupational pension. She pays £50 each week in rent as her claim for HB does not cover full rent, rates and service charge. She has a disability but was not claiming a disability benefit.

Our adviser recommended an application for Attendance Allowance (AA). The adviser rang Disability and Carer’s Service and had the forms delivered. Due to restrictions around lockdown and Covid19 the adviser filled in the form with the tenant over the phone. When the form was complete the adviser sent the form to AA for assessment. 4 weeks later the tenant received a letter from Department of Communities stating there was an award of AA at the lower rate. The award was backdated and a lump sum of £450 was awarded to the tenant.

The adviser did a calculation for Pension Credit (PC). As there was an award of AA there was entitlement to a Severe Disability Premium (SDP). Again due to lockdown and Covid19 restrictions the adviser made the claim over the phone with the Pension Service. This resulted in an award of the Guarantee Credit (GC) part of PC. The award of GC was £15.00 each week.

As entitlement to GC was identified the adviser contacted NIHE and asked that the claim for HB was amended to take into account the award of GC. The client is now in receipt of full HB for rent, service charge and rates. This equates to a payment of £100 each week for housing costs. The award of HB has also resulted in payment of Supporting People charge. This equates to £8 each week.

This case was resolved over a timeframe of 3 months.

Budget Tips

Compiling a budget is an important step in understanding and managing your household income. It allows us to see how we spend our money and can help identify potential issues, prompting early intervention and help prevent difficulties later on.

Take Note of your Household Income and Outgoings

Compile a budget and make it as realistic as possible. The best place to start is to gather information from recent bank statements, payslips receipts and bills. (To change weekly figures to monthly, multiply the figure by 52 then divide it by 12) Use a budget sheet (either online budget planners or ask your housing officer for a budget sheet you can use) There are also many free online tools and resources available from organisations like Advice NI or the money advice service. Once you have compiled your budget try to stick to it as best you can.

Increase Income

Look at your income and ask can you increase it? Get a benefit entitlement check (BEC) to ensure that you are receiving all your benefit entitlements. If you wish to check or discuss your benefit entitlement contact your Welfare Advice Officer at Radius.

Prioritise Expenditure

Take a look at your outgoings, prioritise your spending and reduce your non-essential spending. Remember things like rent, utilities and tv licences are a priority. Look at what you spend your money on and ask is it needed and can I get it cheaper elsewhere. Shop around for better deals.

If in Deficit – Take Action

If there’s more going out than coming in – you’re in a deficit and need to take action. Understanding your household finances is essential. If you are in a deficit it is really important that you do something about it. If you would like to discuss this further, please contact your welfare advice officer at radius housing.

Save a Little for a Rainy Day

Having a little money set aside for that sudden and unplanned expense can make a huge difference and can reduce the need to borrow when you need access to cash quickly. You can start small by saving a token amount on a regular basis, increasing the amount if and when you can. By routinely saving you can build a pot of savings to be used as an alternative to borrowing.

The excitement of Christmas seems to start earlier and earlier with adverts and shops marketing their products even before Halloween. The children get more and more excited knowing Christmas is just around the corner.

With presents and food to buy, and guests to entertain, lots of families can really feel the financial pinch at this time of year. Knowing how to plan a Christmas on a budget may help ease some of the concerns you have. We have prepared some tips that you may find helpful.

Food and drink

• Try to plan ahead and buy only what will realistically be eaten. Think about what normally gets thrown away, make a plan, and stick to it when you go shopping. Shop around and use local markets to find the best value products.
• Check out affordable supermarket offers and shop in advance where possible.
• Find coupons and vouchers and use them where you can.
• Make food last longer by wrapping up your leftovers and putting them in the fridge for the next day.
• Remember that the shops are only closed for one day. You don’t have to fill every available space in your cupboards and fridge, and can always top up on Boxing Day if you run out of anything.

Presents

• Make a list of all the people you need to buy gifts for, to help you budget in advance.
• Set a spending limit for gifts and stick to it
• Consider asking the wider family to agree to spending limits too – remember it’s the thought that counts, and it can be really fun to see what kinds of gifts people come up with on a budget.
• If it is traditional to buy for the wider family members, perhaps arrange a secret Santa so that each family member only has to buy one gift. Shop around for bargains in advance - you can often find great value online if you plan ahead.
• Search your local discount store for any additional stocking fillers.
• Think about making gifts like food or craft ideas that you can make in bulk and distribute. Even a framed photo can make a perfect gift for grandparents.
• Avoid buying for the sake of buying; think about where that item will be after Xmas day and whether you really need it.

Decorations

• Get the children involved in helping to make decorations.
• If your decorations are looking tired from over use, give them a bit of sparkle with art and crafts, glitter and glue.
• Consider making your own crackers - fill them with things you really want rather than the usual dust collectors.
• Wreaths can be fun to make – all you need is a wire coat hanger, a bit of ivy or holly, and some ribbon to decorate it.
• If you want to send Christmas cards, have a look in local discount stores and charity shops for good value. Make a list in advance so you know how many you want to send.

A typical family spent £528 on Christmas presents and celebrations in 2020, according to research by Ebay Ads. This year, 30% of people polled said they planned to spend even more. Yet many struggle to foot the bill. So, next year, why not put money aside from January? Better than borrowing and paying back later with interest. Work out your budget, then start saving!

Merry Christmas everyone!