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When Should You Start Teaching Your Child About Money Management?

As parents, we often wonder how we’ll address money management with our kids. And if you’ve thought about paying your kids to do chores – you’re not alone!

However, it’s a topic that often sparks debate among parents. 

Some believe tying a monetary value to chores is a way to instil a good work ethic; others feel it takes away from kids genuinely wanting to help out.

Luckily, in this article, we’ll take a look at both sides of the coin (and a bunch of other valuable financial stuff).

Let’s jump in.

To Pay For Chores Or Not To Pay For Chores?

Call us old fashioned, but we don’t feel kids should be paid for “usual” household chores like tidying their room, walking the dog, or washing the dishes once a week. These tasks help them learn responsibility, independence, and tidiness – skills they’ll need when they’re adults.

Paying them for every chore might also not be the best idea. Imagine if they expected cash for doing their homework, picking up their clothes, or making a cup of tea for Nan – these “chores” are just part of being a good person, right?

But, it’s totally fine to pay them for extra stuff, like washing the car, helping with house maintenance or mowing the grass. That way, they learn the value of hard work and earning money.

Let’s take a look at both sides of the coin:

Upside

There are many positives to paying our kids to do chores:

  • Instilling a good work ethic: Doing chores tied to monetary rewards teaches children the importance of hard work, dedication, and perseverance. They also realise they won’t be paid if they half-arse the job.
  • Teaching the value of money: Paying for chores helps children understand how money works and the sacrifices needed to get it. It also teaches them how to save, especially if they want to buy something special!
  • Responsibility: Kids may be more motivated to complete chores (or ask for more!) when they know they’re getting paid.
  • Accountability: When children have a particular task to do, we teach them that they are responsible for the job at hand. If they make a mistake, that’s totally fine; they’re learning how to do things to a specific standard.
  • Time management: Juggling chores, homework and social activities gives kids the opportunity to understand the concept of time management. They’ll soon realise that chores come before online games.
  • Independence: As kids get into the swing of things and master the skills of specific chores, they feel a sense of accomplishment and have the confidence to tackle things on their own.
  • Teamwork: Working on chores with siblings or other family members shows how “many hands make light work”. This teaches our children the importance of collaboration and working as a team.

Downside

  • Reduced inner drive: When kids expect to be paid for chores, we’re shifting the focus from genuinely wanting to help to having to help out. For instance, some children may tidy their rooms because they genuinely take pride in having a tidy space and NOT because of the monetary incentive.
  • Setting unrealistic expectations: Children who expect to be paid for everything they do may lead to a sense of entitlement. Helping out should be a must-have, not a nice-to-have personality trait!
  • Reduced value of hard work: Kids must realise that nothing in life comes easy – including household chores. While we’re not saying you work your poor kids to the bone, they must understand that success takes hard work. 
  • Creating a materialistic mindset: Constantly associating chores with money can lead to a materialistic mindset where kids prioritise financial gain over other values such as helpfulness, empathy, and responsibility.
  • Potential for power struggles: Children may start negotiating their pay or simply refuse to do tasks they feel aren’t financially worth it. 

Different Approaches To Pocket Money

When it comes to pocket money, some families prefer to pay their kids a set amount each week or month instead of paying them for individual chores. 

This alternative approach helps children learn about budgeting, saving, and spending as they have a set “income” to work with. You might consider allowing them to earn money by doing chores around the house as extra. 

Quite frankly, we think this is a win-win: weekly/monthly pocket money teaches them the concept of spending and saving, while earning extra cash from chores teaches them the value of hard work and independence.

Here are a few things to consider:

  • Cash is king: Cash is a lot easier to understand than electronic payments – especially for younger children. This is because they can count out pennies and pounds to see how much they have, making budgeting easier. 
  • Bank account: In time, you might want to take older kids down to the bank to open their own accounts. This will help them understand where their money is kept and also allow you to pay them via EFT. 
  • Spend vs. save: Talk to your kids about how they want to spend and save their money. Is there a special toy (or the latest Xbox game) they want? Help them divide their cash into spending and saving categories so they learn the concept of putting money away for a rainy day.
  • Guide them: Help your children make cash-savvy choices and explain how much different things cost. While they can spend their money on random toys, gadgets, or their 50th bottle of Prime, help them understand that keeping some money aside now can get them something bigger in the future.

Expert insights

Here’s what the experts at GoHenry had to say: “Our primary job as parents is to prepare our kids to handle life as adults by teaching them essential skills, and money management is high on the list. One of the most important ways young people learn is through hands-on experience. Paying your child to do chores gives them hands-on practice when the stakes are low, and you are there to support them and monitor their spending and savings.”

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Real-life examples

Here are some comments we’ve found from other parents on Quora:

  • Cleaning up one’s own room and doing one’s share of well-defined household tasks on a regular or rotating basis – those things should be obvious in a family. Certainly not paid extras.” 
  • Another mom (in America) pays her kids for household chores, such as $1 (£0.77) for vacuuming carpets, $1 (£0.77) per toilet cleaned, $2 (£1.50) for wiping mirrors, and $5 (£4.50) for mopping. 

Parent Tip: When And How To Start Teaching Money Management

Parents often wonder when it’s the right time to chat with their kids about money.

The short answer? The earlier, the better!

Here’s how:

Younger children

  • Show me the money: Start by showing younger children what different kinds of money look like, such as a £1 coin compared to a tenner. 
  • Get them involved: Allow the kiddos to count out money when paying at the grocery store, post office, or local cafe. This is a simple way to introduce them to the value of money and what things cost in the real world.
  • Wants vs needs: Teach your youngsters the difference between what they want and what they need, using simple things around the house to explain it. For instance, explain that you NEED to pay the gas bill before you splurge on a new French manicure.
  • Piggy banks: Introduce (and encourage!) the idea of saving with a physical money box. Let them watch their money grow and see their little grins when they reach a savings goal.
  • The “spend-save-share” method: Teach kids to divide their money into spending, saving, and donating. This teaches invaluable budgeting skills that’ll stick with them for life.
  • Play learning: Use board games like Monopoly to teach basic finance and budgeting concepts within a fun environment.
  • Earning money: Depending on their age, you might consider giving children a weekly allowance to see how they put theory into practice.

Older children

  • Basic investment concepts: Once your child grasps the concept of money management, you can slowly introduce the idea of investing. Explain terms like stocks, bonds, and compound interest using relatable examples such as Coca-Cola, Disney, or Netflix.
  • Credit basics: Teach older teens about the concept of credit, how it works, interest rates, and loans. If you have a credit card, involve them in the monthly payment process. Encourage them to work out the balance owed and how long it would take to pay off.
  • Financial independence: Give youngsters a weekly or monthly allowance to help them take responsibility for their money. For example, if they receive 200 quid for the month, they’ll need to make it last for personal expenses like mobile minutes/data, toiletries, and outings with friends.
  • Be a role model: Show kids through your actions how to manage their finances like a pro!

More expert insights

Here are a few insights we found from Christians Against Poverty (CAP) UK:

  • We involved our lad in money conversations from a young age. When he wanted to buy a particular toy, we would discuss whether it was worth it. Then agreed to wait a couple of weeks, save his pocket money and buy a better version of it. He got a better toy and learned the value of money and saving. Make sure to praise your child when they reach their goal!” Steve Camps, Senior Debt Advisor 
  • “We have a 9‑year-old and have done pocket money for two or three years. It really helped with asking for things because the standard reply is, ​“Yes, you can save for it with your pocket money”. Having pocket money teaches her so much about the value of money and that if you are patient, you can save for what you want.”Nathan Davies, Senior Debt Advisor 
  • “I involved my daughters in talks about money from about ages 10/11. We talked about budgets and savings, and they had pocket money. They now both have mortgages, and my eldest now has a daughter of her own, so managing her budget to cover everything they need has been easier.”Helen Ganney, External Affairs Manager 

Tools And Resources

Teaching money management to kids can be done in many ways – especially in this day and age. Books, apps, games, and child-friendly online resources are great places to start.

Here are our suggestions:

Tools

  • GoHenry combines budgeting tools with educational “money mission” content that teaches kids about finances with their very own debit card.
  • NatWest Rooster Money allows children to monitor allowances, track spending, set chores, and save.
  • Gimi is an award-winning app that teaches children about saving, spending, and earning money. It’s also on a mission to educate 10 million kids about personal finance by 2025!
  • Monopoly Go! – the online version of the beloved board game we played back in the day.
  • Peter Pig’s Money Counter is a fun interactive game that teaches children – ages five to eight – about (American) currency. While it’s tailored for the US, the game’s concept applies to kids in the UK, too. 
  • Make-believe games – there are loads of “money games” you can play at home with your children, such as “grocery shopping”, where they line up goodies and “sell” them to family members.

Resources

  • Lloyds Bank has some great ideas for introducing money to kids of different ages.
  • The Million Bazillion Podcast teaches children everything from how credit cards work to understanding cryptocurrency.
  • Zogo App is a free gamified financial literacy app for kids.
  • Khan Academy has loads of useful financial-based resources for older children and teens.
  • BizKid$ is an Emmy-award-winning TV series about money and business featuring young entrepreneurs.
  • Rebel Girls Money Matters is an information guidebook that teaches personal finance through expert tips, pop quizzes, and inspiring stories from girls worldwide.

The Conversation Continues

Teaching your kids about money and finance management is a gift that keeps on giving. By starting early, you can help them develop a strong financial foundation that will last a lifetime.

While payment for chores does instil a sense of ownership and independence, it might lead to power struggles (and wage negotiations) at home. On the flip side, giving your child a set weekly or monthly “income” might be better to begin with as it teaches them about spending and saving. 

Ultimately, it’s important to strike a balance between responsibility and rewards.

Whether you pay kids to do chores or prefer to give them pocket money based on behaviour or grades – do what works for you and your family. 

Please share any tips, suggestions, or personal experiences in the comments below.

We’d love to hear what you think…

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