How to teach your kids to spend their pocket money wisely

With toy shops and days out off-limits for much of the last year, children haven’t had the opportunity to spend their pocket money as normal.

Statistics show that they’ve saved an average of £150 from things like pocket money and tooth fairy earnings, and are now looking to treat themselves!

Teaching children good saving and spending habits starts with talking to them about money from an early age: Making money part of everyday conversations is also really important in breaking down the taboo.
Try helping your children divide their pocket money into three pots: One for spending; one for saving; and one for sharing.

It’s a great way to get in the habit of balancing spending and saving for things, and potentially even to encourage sharing with others such as siblings or friends. Don’t underestimate the spending element, though.

EVERYTHING HAS A COST

We’re often taught saving is good and spending should be capped, but you can teach your child to be a responsible spender, too.

Explain that different shops can have different prices for the same item, and sometimes they have deals and sales, which means they could buy what they want for less than it normally costs. Buying things together when you’re out, while discussing choices and what they can buy within their budgets can help your children appreciate that everything has a cost.

Provide context by referencing prices in terms of the chores, or weeks’ worth of pocket money, that they represent.

Is that comic worth mowing the lawn twice for?

These tips also apply to online shopping – except you’ll need a way for your child to spend their money safely online. Opt for a children’s bank card, where you have oversight of their spending. Otherwise, if you’re going to use your own bank card, make sure you sit with your kids and take cash from the piggy bank as they make the purchase, so that they appreciate what’s happening.

If you need more advice, visit MoneyHelper, which has a series of guides for teaching children about money, or Starling’s Money Explained series, which tackles the basics of family finance.