Pocket Money Responsibility

pollyanna24

Currently, my two girls get £10 a month pocket money.  This is being increased in January to £20 a month (they don't know this yet, part of their Xmas presents).

I'm trying to think of way to get them to learn to budget, but can't figure out how.

I'm kind of getting the older one to listen by saying that I will buy "posh" cookies which are the same as the ones at school, but only cost 25p rather than the £1.10 they cost in the school canteen.  She's only 12, so I've paid for it so far, but she seems to be going mad in the canteen when you can buy it so much cheaper outside.  I've said that aside from a drink every day and a meal once a week, if she buys expensive cookies, she has to pay for them.  This might sound mean, but I do provide a perfectly good lunch and I think she does it simply because it's not "her" money that she is spending and so by giving her the option of a cookie from home or buy one herself, I was hoping to instil the value of money.

But extending this, I was looking to give them more pocket money, but not pay for other things that they get so that they can make the decision as to whether it's worth it.  But the only things I pay for that I think are "luxuries" are Spotify (which only one uses) and a second Netflix screen. 

Are they too young to learn to budget and learn the value of money?  I don't think so, but I'm just not sure how to do it.  Give them a budget for the chocolate and sweets for the month and once it's gone, that's it?   Does anyone do anything else?

At the moment, they spend their money on Starbucks and milkshakes (12 year old) and Robox and Sims Extensions (10 year old).  Of course, I think this is a waste, but it's their money to do as they wish, but I just want them to think a bit more about what they do with it.  If they had to weigh up the idea of getting something at the cost of not getting something else for example.

strawb_shortcake

I don't give my children pocket money as such, all 3 had been earning £20 a month up until March this year. All three could spend it as they wish, my eldest predominantly saved, the middle one saved but to spend on presents for friends and family at Birthdays and Christmas. The youngest tends to be more spontaneous with what he's buying.
They take packed lunch to school every day but I put £12 every 4 weeks on each of their canteen accounts, they know this is £3 a week, if they spend it all they know there is nothing more until next time.

As my daughter isn't earning this Christmas she doesn't have the money to buy all her friends presents as she normally does. I was going to give her the money but we've compromised and she is going to make fudge and treats and I'll buy the ingredients for her.

We do talk quite in depth with them about money and budgeting. We do have a couple of examples in the family where budgeting is non existent and the impact that has on your life so they can see first hand the benefit of living within your means.

Drawingaline

Once my kids had their own bank accounts I made them their own budget on my ynab account. They have to save 10% of any pocket money into a long term savings line (basically called education, just to get them used to saving that small amount every month) then they have lines like gaming, birthdays and snacks. They get £10 a month until 15 and then get an allowance of £50 a month. From this they save £1 into long term savings, and then have to buy their own toiletries and clothes (bar underwear, shoes and uniform). 

My 16yr old now has a part time job and is earning around £500/600 a month. She has to save approximately 40% of this (it's likely that she will go to uni) and last time she got a phone contract she wanted more than I was prepared to pay so gives me £7 a month towards that. She decided she didn't like ynab so has a Monzo account and has set up pots to save to buy an iPhone outright in feb, and for an apple pencil as we are getting her an iPad pro for Xmas. 

I firmly believe that they need guidance in learning good habits early on. My oldest son was awful with money, but using ynab he has become much better at saving and understanding how priorities can change throughout the month. And having a large bank account number does not necessarily mean that you can spend that money, it may be earmarked for something else.

pollyanna24

I think the main thing I have taken from your post is to... put a limit on the canteen card.  Why on earth didn't I think of that?!  I guess I didn't want her to be without money and try and buy stuff and be embarrassed in front of her friends.

But I will look back at what she has spent since September (Year 7)  (yes I am that person with a spreadsheet for everything, drives my kids mad) and decide a limit per month.  That would be the first step.  Why didn't I think of it?  Or is putting that doubt on "if there's not enough on the card" a bit mean?  Or am I being too lenient if I don't do it?  Arrrgggghhh, I don't know!

jennystarpepper

Could you maybe increase to £15 for 6months on the provision that they show you how they are spending and maybe put a compulsory £2 a month to be put into savings?  Then if they do well you will increase to £20 if they are responsible?

It is never to early to start them thinking about budgets and savings. 

I agree with the limit on the school spends, I would be open and say you are checking... from time to time,  even the best children can be influenced if they are the only one sat at the table without the 'posh cookie'. 

strawb_shortcake

pollyanna24 said:

I think the main thing I have taken from your post is to... put a limit on the canteen card.  Why on earth didn't I think of that?!  I guess I didn't want her to be without money and try and buy stuff and be embarrassed in front of her friends.

But I will look back at what she has spent since September (Year 7)  (yes I am that person with a spreadsheet for everything, drives my kids mad) and decide a limit per month.  That would be the first step.  Why didn't I think of it?  Or is putting that doubt on "if there's not enough on the card" a bit mean?  Or am I being too lenient if I don't do it?  Arrrgggghhh, I don't know!

Sorry I tend to waffle and forget the point of my post...
Yes they have their limits, the part of them not having enough and being embarrassed is the reason they need to learn to budget, there is no unlimited supply of money.

When it comes to Birthday or Christmas money they tend to split it 3 ways, JISA, easy access savings and a money box at home, not that they have ever asked to take anything out from their easy access accounts. This year as we weren't going anywhere my youngest decided to put all his money in his JISA, I was quite surprised that he had £200 sat in the cupboard. 
My eldest two seem to be quite competitive on which has the most savings so this spurs them on to save.
On reflection perhaps they do need some practice on budgeting rather than just the theory?

pollyanna24

jennystarpepper said:

Could you maybe increase to £15 for 6months on the provision that they show you how they are spending and maybe put a compulsory £2 a month to be put into savings?  Then if they do well you will increase to £20 if they are responsible?

It is never to early to start them thinking about budgets and savings. 

I agree with the limit on the school spends, I would be open and say you are checking... from time to time,  even the best children can be influenced if they are the only one sat at the table without the 'posh cookie'. 

Ooh, something to think about.
Bit hard at the mo when one is in secondary school and the other not, but mneh is what other people need to deal with.  With 2 years diff, I tend to treat them the same.

pollyanna24

annabanana82 said:

pollyanna24 said:

I think the main thing I have taken from your post is to... put a limit on the canteen card.  Why on earth didn't I think of that?!  I guess I didn't want her to be without money and try and buy stuff and be embarrassed in front of her friends.

But I will look back at what she has spent since September (Year 7)  (yes I am that person with a spreadsheet for everything, drives my kids mad) and decide a limit per month.  That would be the first step.  Why didn't I think of it?  Or is putting that doubt on "if there's not enough on the card" a bit mean?  Or am I being too lenient if I don't do it?  Arrrgggghhh, I don't know!

Sorry I tend to waffle and forget the point of my post...
Yes they have their limits, the part of them not having enough and being embarrassed is the reason they need to learn to budget, there is no unlimited supply of money.

When it comes to Birthday or Christmas money they tend to split it 3 ways, JISA, easy access savings and a money box at home, not that they have ever asked to take anything out from their easy access accounts. This year as we weren't going anywhere my youngest decided to put all his money in his JISA, I was quite surprised that he had £200 sat in the cupboard. 
My eldest two seem to be quite competitive on which has the most savings so this spurs them on to save.
On reflection perhaps they do need some practice on budgeting rather than just the theory?

Guess it works both ways and depends on the child.

I don't want to dictate what my children spend their money on, I guess I just want them to be more "observant" on what they spent it on instead of becoming an adult and having to budget.

Aranyani

How often is your eldest buying Starbucks and milkshakes?  Watch out for her teeth both are full of sugar!! 

One lesson will come when there is something 'bigger' that they want, a party dress, an electronic item etc.  They will have to set the goal and save, you could maybe have a chart at home for motivation.  

Could you introduce the concept of interest?  Be the 'bank of mum' and anything they give to you to save earns a little bit on top? 

pollyanna24

Didn't think about the sugar part of it, but we live on the edge of town, so I guess she would have either or both twice a month.

She did ring me today to say she was "in town" by herself for the first time (her father's decision).  She was ringing because she had no money and was asking for the pin on her account.

But she had forgotten she didn't have any money in her account.  The upshot is that I put £30 in her account with the provision that she would pay me back from "her money at her dad's house" if she saw anything she wanted to buy.

This is fine in principle, but a tad annoyed that she went out by herself with no way of paying for anything if she wanted it and was just relying on "ooooh, I'll ring mum' while I'm at my dad's."  

maman

It's difficult to treat both girls the same at the moment because there seems to be a natural 'right of passage' when children move to secondary school but I'd recommend an allowance rather than just pocket money. Maybe when the younger one moves to secondary school for both of them or the older one now and the other later. 

What we did with our girls was sit down with them and total all the money we spent on them (except school uniform and birthday/Christmas gifts). This included school meals, hairdressers, out of school clothes, swimming, cinema etc.  You might want to do it differently but the principle  is the same. We added it up and paid it as a monthly allowance into their building society accounts. Along with this was a lot of regular  discussion about needs and wants and saving and quality over quantity  etc etc. It worked well but the girls did behave very differently. DD1 was fine but DD2 took the saving a bit too seriously at times and sometimes appeared with socks with holes in! 

Your DD might think differently about the cookies if she knew she could spend the money in town on clothes she liked. 🤔