In this extreme social experiment we call parenting, choices abound. From contentious issues like vaccination, to comparatively trivial ones like when to cut your child’s hair for the first time, we are bombarded opinions on what and what not to do, often in no uncertain terms. Ah, the glorious interweb, font of information (but not necessarily wisdom). So, if you’ve been getting lost trying to navigate the debate around the pros and cons of pocket money, let me assure this one’s completely subjective. Without further ado.


In this post, I try spare you the overload of the ‘pocket money should be earned’ debate. I will cover the pros and cons of pocket money, four ways you can go about setting it up, and some simple tools to help you work out which method is right for you and your child.

The four ways parents manage pocket money

I’ve spoken with a lot of parents about how they manage their child’s pocket money and I have observed four basic methods. They are:

  • On demand
  • By allowance
  • Per task and
  • By negotiation.

1. On Demand

This is where the child asks the parent whenever they need money for a specific item or event. The most common sentiment I hear from this group of parents is:

“I provide everything my child needs, so they don’t need pocket money.”

While technically correct, the reality is that they probably still get the same material outcomes as other kids who do receive pocket money, i.e. they get to go to the movies, or to buy a treat, or whatever else their little heart desires. It’s just that they have to ask permission for how that money is spent every time they want it. Really, it’s pocket money on demand and subject to the discretion of the parent. This is the only method that allows the parent to control how, when and on what money is spent.

2. By Allowance

This is the fixed amount approach: Mum and Dad give child X dollars a week/month/year, and it’s up to the child how that money is spent. The money is not a reward or payment for any particular behaviour or task, it’s a given. The exception to this is deprivation as a form of punishment – much like grounding, or banning from watching TV, you can hold back the allowance when your child behaves badly.

3. Per Task

This method most closely mirrors a wage or salary: do this task, and you will be paid accordingly. Different levels of pay can be associated with different tasks, and often the value varies with the amount of time or effort required for a given task. For example, you might offer $5 for stacking and unstacking the dishwasher for a week, or $10 for doing the washing up for the same period. It reiterates the concept of earning money through effort: a child who doesn’t want to earn much doesn’t have to do much, but if they want more pocket money they need to put in more effort.

4. By Negotiation

Perhaps the most entrepreneurial approach, this method not only varies the pay with the task, it requires the child to negotiate what that pay will be and what the deliverables are. Parents using this method set the expectation with their child that s/he will come to the parent with a proposal to complete a task and negotiate with the parent as to what it’s worth to them. This method can help children learn to spot demand: if a child knows both parents detest washing the car, they can charge a premium for that task. Be warned – kids are smart. They will work out how far they can push you with this. Of course, that’s exactly what we want them to do, but be prepared not to curse when it happens.

Which method is right for you and your child, right now?

Good news: there is no right or wrong answer! (Despite what Facebook parenting experts tell you!)

It’s a matter of personal choice, and you may find you use all four types at various points over the years. That was certainly the case for me – see below for the phases I went through with my Mum. It’s a cautionary tale in one way: I stopped doing the ironing at 14 ½ years, leaving Mum to iron everything except my school uniforms. I’ve ironed about twice a year on average ever since. (I REALLY detest ironing!)

Pros and Cons of Pocket Money | %%sitename%%

A cautionary tale: my experience receiving pocket money

Ask yourself two questions

You can use the flow chart below to decide how you think pocket money will best work for you and your child, right now.

Pros and Cons of Pocket Money | %%sitename%%

Start at the top and work your way down to one of the four pocket money methods

Still not sure? Let’s explore these questions in a bit more depth:

Question 1: Do you believe children should be paid for chores?

I was raised being paid for chores, so it never occurred to me to ask this question until a friend of mine recently offered an alternative point of view.

Her take on it was that chores are part of life – a responsibility we all share. No one pays Dad to cook dinner, or Mum to do the washing – it’s just what Dad and Mum do for the family. My friend believed that paying her child for chores would mean he missed a big lesson about contributing to family life and shared responsibility.

On the flip side, there are parents out there who think getting your child to do chores is robbing them of their all-too-fleeting childhood. Why shouldn’t they be rewarded financially for something that takes them away from the fun of being a kid?

Ah, moral questions. Enjoy wading through the quagmire on that one, or simply go with the majority of parents I’ve surveyed and pick ‘Yes’.

Question 2a: If you do believe children should be paid for chores, do you prefer to reward them for effort or results?

Assuming you went with the majority and said ‘Yes’ to paying your child for chores, the next question is whether you’re going to pay them for effort – their time or the type of task they undertake – or for the result they produce?

Not a question I’d considered much, until my mum reduced my pocket money for doing a crappy job of the ironing one week. Her explanation was simple: ‘I’m not paying you do something I’ll need to do again myself because you didn’t do it properly.’ Obviously, I was disgusted and went on strike to protest… until I wanted to go to the movies three days later.

In case you hadn’t guessed, my Mum is of the ‘results’ persuasion, which I theoretically agree with.

However, most jobs I’ve had do not reward results in the short term. They reward effort. If I stuffed up something while I was working, I had to do it again, but I got paid for the failed attempt anyway. I might not get another shift for a while, or I might eventually get fired for my poor productivity, but that week I got my paycheck. So, you could really argue either way for this one – your call!

Question 2b: If you don’t believe children should be paid for chores, do you believe children need some cash of their own?

At some point in their lives, our children are able to make their own decisions. When you think your child is ready to make such decisions relating to money, you are probably ready to let them have cash of their own by paying an allowance. If you think your child is not ready to make these kinds of decisions, you may prefer the ‘on demand’ method: simply providing the cash they need, when they want it, when you have discussed it.

Personally, I’d prefer NOT to have my hypothetical teenage son ask me for $10 so he can buy condoms. I’d rather he had the $10 to be responsible for himself.

Pros and Cons of each method

If you’re still debating which way to go, you can consider the advantages and disadvantages in this table:

Pros and Cons of Pocket Money | %%sitename%%

What’s next?

Perhaps your choice is obvious, perhaps it’s not. Maybe you want to set aside some time to speak to your child about it, depending on their age. Remember that all four methods can work – it’s up to you when and how you apply your choice, and you can always change your mind. Hooray for a parenting choice that’s not fraught with danger!

Do you have a story to share regarding pocket money? We’d love to hear it – please leave a comment below.


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Lacey Filipich is the co-founder and director of Money School. She helps parents raise financially savvy kids and helps adults get on top of their finances. Connect with her on LinkedIn and follow Money School Facebook to learn more.


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