How much pocket money should I give my child?

There's no one-size-fits-all amount. A useful framework is to list the discretionary items you currently pay for your child (toys, entertainment, snacks, clothes, games), decide which ones your child is old enough to be responsible for, then give pocket money to cover those items instead of paying for them directly. The amount should be based on the actual cost of what they're now responsible for, not a generic age-based figure.

What happens if I just pay for everything until my child is an adult?

A child who has never handled money themselves has no experience earning or budgeting. When they become financially independent, they're likely to want to maintain a standard of living beyond their means, which often leads to overspending and money mistakes, including debt.

Should pocket money increase as my child gets older?

Yes. As kids get older, pocket money should gradually take over more of what parents used to pay for directly, shifting responsibility from parent to child. By the time they're adults, they should be fully in control of their own discretionary spending.

What should pocket money cover, and what should parents still pay for?

Pocket money should generally cover discretionary spending — things like games, toys, entertainment, casual clothes, or a phone bill — rather than necessary expenses like school clothes. Which discretionary items are covered should be reviewed periodically and can shift from being fully parent-funded, to funded by pocket money, to funded by a child's own earnings as they get older.

What should I do if my child overspends their pocket money?

Stick to the agreement. If a child spends their budget early, avoid giving one-off top-ups to bail them out, since this is how they learn to budget. Letting a child feel the consequence of overspending is more effective than rescuing them each time — though it's reasonable to soften this if strict enforcement is seriously damaging your relationship with your child.

How much pocket money should I give my kids?

Will Rainey

Aug 28

5 min read

Clearly, there is no one-size-fits-all amount, every family is different. In this blog, I’ll go through a useful framework to determine how much you should give to your kids as pocket money (or 'Allowance' for my readers in the US) for your family. I also share how we have recently adopted the framework such that my eldest daughter pays her own phone bills. A lot of this has been inspired by a conversation I had with Dennis Harhalakis. Dennis is an amazing money coach and has been using the framework set out below with his three boys. To help set the scene for the framework, let us consider an extreme case in terms of a child’s financial upbringing.

Extreme case: Parents pay for everything

Let’s imagine you have a child and you buy everything for them until they become an adult at 18. If they want new clothes, you give them money. If they want money to go to the cinema with their friends, you give them the money. If they want the latest iPhone, you give them money. Then, at 18 years old, they go out into the real world and you want them to be adults so you don’t give them any more money. You’ve done your job! This child would have no experience of how to earn or budget money. They probably want to maintain their high standard of living which is now well above their means. These factors are likely to lead to them to making a lot of money mistakes and potentially overspending (debt).

Chart about when to give kids pocket money

Essentially, we want to use pocket money to avoid this scenario and make sure our kids are prepared when they become adults.

Pocket money framework

When kids are very young, you will clearly have to pay for everything for them. Snacks, toys, clothes, entertainment. As they start to get older, pocket money can be a way of slowly transferring the responsibility of who pays for things from you to your kids. By the time they become adults, you want them to be in control of managing their own discretionary spending.

Putting the framework into action

Essentially, you need to set out what things you are currently paying for and decide which of those discretionary expenses your kids are old enough to be responsible for. Then you give them pocket money at the start of each week (or month) and they pay for those expenses. For our girls, when they were young (6 to 10), we gave them some pocket money each week. We told them that we wouldn't buy them any toys, apart from on their birthday and at Christmas. If they wanted other toys they have to save up their pocket money to buy them. We had a rough idea of how much the toys they might like cost and so we have set the pocket money to be enough that they could afford a new toy every 6-8 weeks if they saved up (after allowing for a bit of their pocket money to be saved for the long-term). As they got older and more independent, we started giving them more pocket money and will no longer pay for certain things. If they decide to use their pocket money for other things or decide to spend it all in one go, that’s their choice.

Example: Eldest daughter pays her own phone bill

When my eldest daughter turned 13, we gave her my old mobile phone (no social media). We also set up a monthly phone contract for her. As we are in Thailand, the contract is around £10 per month and is paid via a mobile app.

Instead of paying for the phone bill directly, we increased her pocket money (transfer to her bank account) and gave her the responsibility of paying of her own phone bill, i.e., she had to download the mobile carrier app and make the monthly payment.

This allowed her to understand how much her phone bill is and the responsibility of looking after her expenses. She actually enjoys having this responsibility.

Expending the framework over time

Essentially, the framework is to consider all the different things that you already spend money on for your kids and consider which ones you feel your kids are old enough to be responsible for. Then, rather than paying for these things directly, you give your kids the money as pocket money and they pay for these things. Here are some discretionary items many parents cover for their kids:

Computer games
Mobile phone
Toys
Comic books/magazines
Snacks
Entertainment - cinema, bowling, ice-skating
Holiday spending money
Casual clothes

Set a date each year to review the list and decide which items are newly expected to be paid for from pocket money. It might be that one month they prefer more new clothes than going to the cinema, that’s fine. They have their money and can decide. Your role is to allow them to make mistakes and learn from these mistakes, i.e. don’t pay for these items when they overspend. Clearly, the focus is on discretionary expenditure, rather than necessary expenses like school clothes.

Earning versus giving pocket money

In short, when kids are young, the focus of pocket money should be to form a good savings habit so giving them it allows them to achieve this without distractions. As they get older, they should learn about 'earning' money. It is then up to you (ideally as part of a conversation with your kids) to say which spending items you will finance via pocket money and which ones they should now have to pay for via earnings. For example, you might still want your kids to be able to pay for non-school clothes so they can opt to use their pocket money towards those, but you may want them to earn money to cover new gadgets. This will vary massively by family and the maturity level of your kids.

Stick to the agreement

Very important point: Once you set out the rules for spending, stick with them. For example, if you say that they have £20 per month for entertainment, and they spend it all in the first week, then you need to make sure you don’t give ‘one-off’ bonuses so they can go out the following week. I know this can be very hard but this is how they learn to budget.

If they get the impression that breaking their budget doesn’t have consequences, then that impression will stick and could lead to them using debt as they get older. If they want more, they have to earn more, just like in the real world.

That being said, allow yourself to back down if money is having a negative effect on your relationship with your kids. What to read next? Should pocket money be linked to chores?

Blog cover for how much pocket to give your kids

I hope you found this framework useful. If so, please share and subscribe for more money lessons for kids. Thanks for reading!

Will

P.S., To help your kids use their money wisely, grab them a copy of Grandpa's Fortune Fables. To help your kids keep hold of their money, grab them a copy of Frankie Fortune. If you've read either of them, an online review would be very much appreciated.