MY MONEY

The real reason kids are earning less pocket money

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Kids earn around $10 a week in pocket money, on average, according to a survey of over 1000 parents by the Commonwealth Bank. But it's really less than we did as kids.

The bank found that pocket money has failed to keep up with inflation, rising only 3.7% a year over the past 30 years, or 12% below the inflation rate of 4.2%. Most parents calculate pocket money by matching their child's age to the dollar amount.

Seven- to nine-year-olds receive an average $7 a week and 13- to 15-year-olds get $14, according to the survey.

the real reason kids are earning less pocket money

Pocket money is a terrific educational tool and around 80% of parents hand it over. How else will their offpsring learn about budgeting, saving and spending?

They need to make mistakes with their own money, even though it is frustrating to watch them do it. My kids will happily spend and waste my money but are much more cautious and stingy with their own.

Pocket money is more widespread with older kids (84% of 10- to 12-year-olds) compared with 55% of fours to sixers. Some 77% of seven- to nine-year-olds receive it.

Parents tend to fall into two camps - those who insist kids earn it by doing chores around the house and those who pay regardless.

Although 92% believe chores should be done regardless of money, only 71% of parents tie pocket money to jobs such as room tidying tor dish washing.

Children also pick up money from other sources before they start part-time work. The survey revealed that 45% receive money as presents while 27% collect it from the tooth fairy and 13% are rewarded with cash for achieving good marks at school. Boys typically earn $296 a year from sources apart from pocket money, $20 more than girls, who get $276.

With all that cash flooding in, 60% of parents consider kids financially savvy. A quarter of parents say they manage their finances better than they (the parents) do.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
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