Teaching children the value of pocket money: are we doing it wrong?

Children today are richer than ever, earning an average of $10.36 in pocket money per week. But in an increasingly digital, cash-free age, their understanding of money could be in danger.

We had a lively discussion today in the Starts at 60 office about pocket money. For some of us, it was an unattainable luxury; our parents simply didn’t have the money to spare. For others, it was a reward for every chore and good deed. Some of us were taught that cleaning was something that had to be done – we were outright shocked to find other kids were getting paid for it!

No matter how we were raised, we all agreed on one thing: pocket money is a great way to teach kids about financial responsibility, instilling values that can last them a lifetime.

However, children’s understanding of pocket money today could be very different. In the era of PayWave, online shopping and App Store purchases, parents today face a new challenge: how can we teach children the value of money in a cashless society?

According to new research by Commonwealth Bank, children today face some interesting new hurdles:

• 61% of 6-year-olds believe it’s free to watch movies on their parents’ phone or tablet.
• 18% of 7-year-olds believe it’s free to order something online.
• 40% of 5-year-olds believe “you can use a plastic card to get free money from a machine in the wall”. (More touchingly: one third of 5-year-olds believe there is somebody on the other side who hands their parents the money).

Most of today’s parents choose to give pocket money the traditional way: with physical cash. Even more encouragingly, Aussie kids are still great piggybank savers; nearly half will set aside all their pocket money.

The vast majority of children’s purchases are in traditional brick-and-mortar stores. However, with more than a quarter of kids are now shopping online this is figure likely to go up as physical cash becomes a thing of the past.

Did you get pocket money as a child? How would you teach the value of money to children today?