… Why the Barefoot Investor for Families teaches that every child should be working for their pocket money (and how to manage it at every age).
Kids Pocket Money – are your tweens earning it?
When kids are young, money is meaningless to them. Especially these days with electronic banking. Kids pocket money is largely invisible, and appears out of nowhere. I remember when I was young, sitting with my mother as she dutifully banked and allocated her wages to bills and groceries. Once the money was gone, that was it.
Giving kids pocket money teaches them to how to start making money decisions – whether to spend it or save it and when.
The question of pocket money is one that frequently comes up when discussing how to teach kids about money. In parenting forums around the world, the topic is hotly debated. Whether it should be earnt, how it can be spent and at what age you should start. As we roll into the new year, it’s the perfect time to put new systems into place at home.
In the Barefoot Investor for Families (our new family money bible), Scott Pape attempts to answer the questions around Kids Pocket Money once and for all. We’ve condensed the best advice for each age group with some tips to make it easy to manage and not another chore.
Everyone pitches in, and earns money when they do extra chores
Lucky for us, Pape outlines the teaching that we already follow at home. It’s good to see we’re on the right track with this and don’t need to make huge changes. Our belief is that everyone has basic chores to do, and these are not ‘rewarded’ with pocket money.
Contributing to the smooth running of the household is a basic expectation. Everyone, even the littlest members, can help with things like putting their toys away. As well as taking dishes to the sink and folding tea towels.
If a child wishes to take on additional chores, then they start to earn pocket money. All pocket money then gets allocated to a different purpose. As a result, they can start to understand saving, spending and obligations.
The Barefoot Investor for Families uses the same “buckets” concept that is outlined in the original book, with adaptations for different ages. Most importantly, each dollar earnt is to be equally shared amongst savings, splurge money and giving. This not only lets kids start good savings habits. But also teaches them to enjoy their money and save up for things they want.
Recognising that most chore charts and trackers are dismal failures that lead to tears and stress. The book says to only track three extra jobs per week, with a set amount per job. They include a handy chore tracker for the little ones. This can be printed and used over and over. As a result, it starts building in money tracking habits.
Pocket money guidelines for every age and stage
In the Barefoot Investor for Families, Scott Pape talks about the need to teach children the value of money through work. Yes, work. Starting with small chores at home to earn pocket money, creating business ideas in the tween years, and getting a job when they’re old enough. As he rightly points out, how can we expect children to successfully enter the workforce after finishing their education, having never experienced having a boss, or working with others?
Up to around seven years old, your kids can start by helping with bigger chores, like tidying their room, putting out the recycling, helping change the bed linens and helping fold their clothes. At this age, it’s okay to help them with their jobs, but don’t take over.
For tweens and younger teenagers, jobs can get bigger and more physical – helping with gardening and yard work, cleaning out the car each week, feeding and caring for pets.
Teenagers and pocket money (the good news!)
This brings us to the teenagers. As well as the age-old question of whether they should they get pocket money if they are of working age.
While this one is still up for debate, there is no doubt that your teenagers are expensive. They have little concept of how much things cost until they must buy them for themselves.
As they grow older, it is important that the burden of costs for luxuries and treats is moved from parents to teenagers. Research from the Financial Planning Association of Australia found that 25% of children don’t get any pocket money at all. Almost 50% were getting between $10 and $39 a week, with an average of $17.90. At almost $80 a month, or $1000 a year, this can soon add up for already stretched parents!
Importance of getting a job
In the Barefoot Investor for Families, Scott Pape outlines the importance of teenagers getting a job. Importantly, he debunks the arguments from parents that teenagers need time to focus on their studies and sporting activities.
While these are no doubt important, having a part time job teaches teenagers many life skills. These skills will carry them through to their working life (and improve their studies too). The lessons of hard work, punctuality, cooperation and being part of a team. Taking responsibility and communicating with the public are just some of the benefits of working.
Pape has a whole chapter dedicated to teens getting a job. Whilst the book is aimed at parents, it is an easy read for teenagers and is full of useful advice and teachings for teenagers. He has interviewed recruitment managers from teen employers like KFC, McDonalds, Woolworths and Coles, and compiles their best tips and advice for your teen. He’s also included a handy resume writing guide – complete with tips on how to write a resume when you have no experience and what employers are looking for from teenagers.
Empower your kids with financial literacy
Financial intelligence doesn’t just happen. If it’s not explicitly taught, your children will pick it up from watching those around them. Earning pocket money is a great way for your kids to start to take responsibility for their own money. They will also feel the joy and the empowerment that having financial control can bring.
Best of all, teaching your kids that money is earnt, and is a reward for hard work (and not good behaviour) sets them up for the realities of working life.
Have you bought your copy of the Barefoot Investor for Families yet?
Don’t own a copy? Read our article Everything you should be teaching your kids about money – we review The Barefoot Investor for Families. We bought ours from Big W, grab a copy from your local bookstore or order direct from The Book Depository.
If you enjoyed reading this, you might also like our article on Money lessons for your tween.