Pocket money inflation: What is too much to give kids?
According to research out this week, Irish children are busily negotiating higher weekly allowances from their parents after years of austerity. But what's too much? Kathy Donaghy reports
With new research showing that Irish teenagers are now getting more pocket money than they were 12 months ago - perhaps one of the tentative signs of economic recovery - the questions for parents still remain: is it a good idea and how much should I give?
By their very nature, kids will collect all sorts of stuff. They will fill boxes with paperclips, flyers from shop windows, pencils and indeed money. With the onset of friends giving hard cash for birthdays and communions, it seems that children are more than ever are aware of the power of money in their pocket.
According to the Irish League of Credit Unions' Teens and Money survey published this week, while 73pc of parent don't believe Ireland is out of recession, some 70pc of teens receive pocket money with 73pc receiving it weekly.
Those paid weekly got €13, the 6pc paid daily got an average of €9 and the 5pc paid twice a week were paid €26 and the 15pc paid monthly received €23.
If parents were to sit down and add up the cost of what they were spending on "non-essential items" for their children, they'd probably be shocked. Of course essential items like new shoes and school-related costs are non-negotiable. But how do parents keep a rein on the purse strings if they are already paying their child's phone bill as well as paying out on a weekly or monthly basis for courses and classes?
Where does discretionary pocket money fit into all of this? And does it even have a place in post-recession Ireland where parents had to cut back on unnecessary items? With pocket money it seems that the jury is still out when it comes to hard and fast rules around giving.
CEO of Parentline Rita O'Reilly says decisions around pocket money must be made on an individual family basis because some families can afford to give more than others and some can't afford to give it at all.
O'Reilly says it becomes difficult for parents who give pocket money to refuse to give more if their child has spent theirs and then friends turn up at the door wanting them to go out. She says in the face of this pressure, most parents would cave in even if they tried to use the argument that their boss would not give them more money just because they wanted it.
"Some children are good at managing money, others are not. You are either rigid about it or you're not. I personally feel I couldn't be so I don't give pocket money," she says.
"I would say don't give too much - children have to have respect for money. It really is up to each family to decide. But if you can't afford it, you can't afford it. It's risky if a child is getting too much money as you have no control what they spend it on," says O'Reilly.
"My own preference is not to give it based on the fact that they always want more anyway," she says.
Financial advisor and money guru Frank Conway says giving children their own money is a good way to build up trust and help them to learn about money. Conway, who has developed a financial awareness education package suitable for senior cycle and transition year students, says children need to learn from a young age how to manage money.
"You give them some money, you trust them and then evaluate how good or bad they are at it," says Conway, who believes that being financial savvy is a skill that needs to be learned.
He says it's also important that children have a sense of earning their pocket money and parents could link giving pocket money to doing well at school or doing specific chores in the home.
"This gives a sense of ownership. If you're earning something, it has a value and this has to be developed from an early age.
"It's important for kids to discover the whole concept of budgeting - it's a tough lesson to learn but if you do that from an early age and plan well, you develop a good culture. There are some people who grow up having no concept of money. Some people have a bad relationship with it," says Conway.
Conway stresses the importance of instilling in children the fact that money is a finite resource and for them to have a healthy relationship with money, they must understand this from an early age.
"Parents can gently introduce this concept. I have seen children as young as four or five begin to understand the value of money. I don't know if we are doing enough in this regard. The recession has perhaps helped a bit because the money just wasn't there," he says. While many parenting experts also recommend the concept of offering pocket money in return for children helping around the house, this is not without its critics.
Psychologist David Carey says he doesn't believe children should be paid for chores. "I see no problem in giving children age-appropriate pocket money. But as a member of the family, everyone should pitch in with the chores. Mum and Dad don't get two euro for emptying the dishwasher," he says.
So what is age-appropriate for younger children and teens? "That has to be a family decision," says Carey. "For children in the junior cycle, maybe two euro a week and up to ten euro a week for older children - it has to be reasonable.
"I just don't think it should be tied to household duties. That's not how families work. They work on the basis of co-operation. The family is a unit in which everyone contributes".
Mother-of-three Lisa O'Malley, a lecturer in marketing at the University of Limerick, says while her policy on pocket money is ad hoc, she thinks it's very important that her children know the value of money.
Her children, Molly (16), Noah (11) and Ruby (8), don't receive pocket money every week. However, she covers the phone credit of her two older children and any money for courses or extra-curricular classes that some parents might give pocket money towards.
"I've moved away from tying pocket money to everyday chores. I don't expect money for cooking the dinner. If my 11-year-old wants a new game and it costs €50, I'll negotiate with him on some gardening, for example, and he'll ask how many days will that take? It's not the same as everyday chores - I expect them to do those. We all live in the house and we're working full-time," says O'Malley.
"I did wrestle with the idea of household chores but I shied away from the idea of paying them for their contribution. I have in the past linked money as a reward for school work," she says.
"The children do ask me about how much things cost and I feel they have a sense of that. They might ask me why do some of their friends have lots of new clothes, and I tell them you do music lessons and I try to talk to them about these choices," says O'Malley.
Until recently the culture of instant gratification influenced the spending habits of many. But with recession came a national tightening of belts. It also resulted in a stark reappraisal of our spending habits. Children had to take this on board too and it was perhaps a tougher lesson for them to learn.
If we have learned anything from our recent experience, it's that all of us need to be more aware of the value of money and the experts agree that if we don't act responsibly with our money, we can't expect our children to.
So whether you give them money weekly, monthly or not at all, get them to help out at home in return for financial reward, like all things in parenting, there is no right answer.
Put in place concepts of budgeting and saving
Introduce the concept of managing money early to children and give them some responsibility for their own budgeting.
Decide within your family's budget what is appropriate for your child. This should be age appropriate.
It's a good idea to introduce the concept of saving a portion of the pocket money with the rest allowed to be spent on a magazine or a treat item.
Stick to the agreed amount and if they blow the budget, refuse to give them any more.
Try to instil a sense of how much things cost. Children can grow up believing their parents are walking ATMs. Talk to them about the choices you are making as a family.
For older teenagers, keep a close watch on what they're spending the money on. If the money is running out too quickly, you need to address it with them.