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It is common for parents to give children pocket money, but should we give them pocket money for free?
I am thinking:
Allowance, or pocket money, is more than just giving children money to buy things with.
First, it gives them a degree of control over their life, if you let them spend it without many limitations (i.e., they want that toy you think is dumb and won't buy for them, they save for it). Children value that sense of control, even if it's fairly small.
Second, children need to learn to save and budget, and how to value money. Children who simply have everything bought for them (whether that is "a lot" or "a little") do not learn to save up for things they really want, nor do they learn to selectively choose things that will have more value. They simply get whatever you're willing to buy them at that moment. Giving them an allowance helps teach them these things - particularly if it's a sufficient allowance to cover more than just candy and toys.
My take on this is to give children an allowance that grows as they do, both in dollar value and in what they're expected to buy with it. In elementary school aged my kids get a small allowance, one that grows with each year, but is basically for toys/snacks.
In middle school, maybe we'll add some "food" allowance, and let them make choices about what they do for lunch. They can pack a lunch (at our expense) and save the food money, or they can buy at school with their allowance. Snacks and such also come from this. We'll also start adding clothes in.
In high school, they'll fully add "clothes" to that allowance, and have again a larger allowance to compensate for it. We'll add what we spend on clothes for the year to their allowance, and let them choose - do they spend the same on clothes, more, or less, understanding the rest (plus or minus) goes to what they spend on other things.
We'll also be looking out for other things to add to their purview; perhaps activity money (think after school soccer, gymnastics, that sort of thing).
The idea here is to teach them how to evaluate tradeoffs in a "safe" environment. This is something I never really learned to do well as I had very small allowances as a child; but I think it's important to learn at that age.
I separate this intentionally from money for chores. We don't pay for chores right now; doing housework is expected and necessary for the family, and not something that should be tied to money. I don't get paid for it, my wife doesn't get paid for it, so my kids don't either. If there is something out of the ordinary that they offer to do instead of us hiring someone, or if they need money and want to do extra work to get it, we'll consider that - but not the usual and customary things (dishes, lawn, laundry, etc.), nor the 'fix up the house' stuff we're normally doing.
I think it's reasonable to take the other approach here - that it's helpful to teach kids the value of earning money by work - I just don't find it a good approach to teaching them the necessity of doing basic work for the family's benefit.
We give our kids commissions. Payment is contingent upon work.
Preschool, we give a small stipend for chores.
Starting at about 6, we stop the stipend for chores. When they do work beyond normal chores, they get paid the same as if we had hired someone to do the job (less our expenses - say gas that we provide for mowing the lawn). As they get older, the amount they want/need grows beyond what is comfortable for our budget, and they have to start seeking work beyond the home.
Edit: As the kids earn money, we expect them to take on much of their own expenses from that money. This means that we can pay market rates while living on a fixed budget, since the much of the money they earn is money we would otherwise have to spend on them anyways.
We leave a bowl of change around and make no claims that the kids can't take it whenever they want. Our goal in doing so was to decrease the appeal of money in general and try to get them to focus on needs and limits first.
In their case there isn't a great deal they need money for. They're 5 and 7, so not too far off your kids' ages. They like getting snacks from the school snack kiosk once a week and we don't make them do anything for that. But we don't necessarily give them the money as much as we remind them to get it from the bowl. We've explained they can take $1 and share, or $2 and have one for each of you but you'll run out of money faster. They almost always choose to share and so far haven't bothered taking more than they need.
As for "pocket money" - Personally I don't think kids need to carry around pocket money until they are at an age where they can find themselves stranded and a little pocket money could un-strand them. Kids have a habit of bragging or not being careful, so carrying around pocket money with no designation could result in them being robbed or scammed or lay the foundation that they can buy frivolous things because they have the money on them and have no reason not to. Naturally, that depends on how you raise them. But I would never assume a kid, no matter how they are raised, is beyond the threat of developing bad financial decisions.
In the chinese culture, or maybe it's just the americaized chinese culture, special occasions get red envelopes which tend to have money in them. What this money is for changes depending on who you ask. For me, I give the red envelopes as a way of saying "this money is for whatever you choose" without veto. Obviously it has limits. I'm not letting them buy crack with it. What we've seen is that in general our girls have their red envelope money they could carry with them if they want. For the most part, they never do. The only time I've seen them care to use their red envelope money is when the ice cream truck comes by. This is the closest thing we have to pocket money and thus far they have not abused it.
We don't do the whole chores for money thing because we want to focus on them doing chores to help out in the household. They do chores, some horrid, and we talk to them while we all work together. We want them to understand what it feels like to do the chores, and imagine what it would feel like to be the only one doing the chores while everyone else did nothing. Plus, we want them to identify the differences in allotted time when you get the job done right, efficiently, and not sloppily and have more time for fun, versus moping around and wasting your whole night when you could have got the job done in 2 minutes and had 2 hours to play. This is relevant because if the reward was money it might grow the notion that every inconvenience they address in the house merits a reward in cash, which may lead to them not doing these chores at all unless we pay them.
So to answer, pocket money for free is fine so long as they don't behave irresponsibly with this pocket money. Plus, it depends on the regularity of them receiving pocket money since it is harder to be responsible if your pocket money comes back as soon as it is spent.
As for earning money through you as a parent - well, I sort of see that as more work than it's worth. I've brought my kids to work with me. They get to see how horrible it is to earn wages... but that's a topic of another discussion.
