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Teaching your child the value of money

We don’t receive financial education at school, so teaching children about money starts at home. That can seem scary if you’re not good with money yourself, but with a simple pocket money system you can easily show your children strategies which help them learn and grow their own money management skills.

By helping your children understand about finances from an early age, the hope is that they’ll carry that knowledge through into adult life.

Setting the right amount

  • Every family has its own circumstances, so it’s not for me or anyone else to tell someone how much pocket money to pay. But one thing I do suggest is: link it to your children’s age. That way it grows as they grow, at their pace.
  • My wife and I pay £2 pocket money per month for each year of our children’s age. Our daughter is 11, so she gets £22 per month, and our son is 13 and get £26 per month.
  • The amount you pay isn’t important, but linking it to their age gives you and them a system which makes things simple.
  • I also strongly recommend paying pocket money via direct debit or bank transfer – that way you’re never ‘in debt’ to your children when you don’t have spare cash, which isn’t the example we’re trying to set!

The value of money

It’s important that children learn the value of money and how far it goes. The easiest way to start is with you buying their needs, and them buying their wants.

  • Needs would include things like school trips, uniform, holidays and so on, while ‘wants’ covers everything else.
  • When my daughter asks for the third time in a week if she can get some glue to make slime, or my son asks about a new Xbox game, those fall into their wants!

I was reminded of how well this system works when I was out shopping with my daughter. She loves crafts and came back to the trolley armed with all kinds of coloured paper, Post-it notes stickers and pens. She looks at me with her puppy dog eyes and says, ‘Can I please have them?’

When I told her, ‘Yes, of course, but you have to pay for them out of your money’, suddenly almost everything went back and she was left with some pens and paper that cost less than a pound!

That’s not to say that you shouldn’t treat your children whenever you want to, that’s your prerogative as a parent: this system simply restricts their spending so they can truly learn the value of money themselves and see how far it really goes.

Earning and learning

Children have to learn that money doesn’t come for free. So how can you encourage them to understand that money is earned?

By linking pocket money to the completion of chores like tidying up or taking out the bins, you can easily instil the importance of hard work and its impact on what we earn. It only took one lower payment after tasks were skipped for our children to learn that lesson!

Doing this teaches your children that it’s their money, they’ve earned it and are entitled to it. They feel good, it’s different to when we’re given things. Sometimes it’s dark, cold or raining when the bins go out, but afterwards my children stand with pride: they’ve earned their money and they get to spend it on what they want.


Most children are ready for their own bank account aged around 13. This takes the pocket money system to the next level, especially when used with a pre-paid card such as Osper which acts like a debit card and gives more independence and freedom to adolescents.

With their own account, it’s time to start learning more about incomings and outgoings. Make sure all their personal ‘bills’ like a mobile phone or online subscription come out of their account. This way money comes in and it goes out, so they learn about managing incomings and outgoings.

When they’re doing this in the safety of the family circle, and their spending habits each month are fairly modest, it’s the perfect environment to take the first steps towards good personal finance skills.

Learning how to manage our money is just like learning to walk: we need a guiding hand to hold and encourage us along the way.


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