When it comes to teaching children about money, pocket money has always been the great British experiment. From a few shiny coins on a Saturday morning to digital transfers on apps like GoHenry or NatWest Rooster Money, the pocket money debate has evolved with the times but the purpose remains the same: helping children understand value, choice, and consequence.
Last week, we explored why money education needs to start before the age of 10. This week, we’re looking at one of the simplest - and most powerful - tools to make that happen: pocket money.
Why Pocket Money Still Matters
Pocket money is often a child’s first encounter with financial independence. It’s where they begin to grasp what money does, not just what it is.
In the UK, children aged 6–10 receive an average of £4.99 a week, according to GoHenry’s Youth Economy Report 2024. But whether it’s £1 or £10, the real lesson lies not in the amount, but in the conversation that comes with it.
When parents use pocket money as a teaching tool, discussing saving, spending, and giving, it turns a simple allowance into an education in responsibility.
Pocket Money and the Cost-of-Living Crisis
In 2025, UK households are still feeling the pinch of higher living costs. Families have become more selective about what they spend and, increasingly, about how they teach children to handle money.
Research from the Money and Pensions Service shows that nearly 40% of parents have reduced or paused pocket money in the past year due to financial pressures. While that might sound discouraging, it also opens the door for more meaningful conversations about budgeting, priorities, and value.
Children can learn a great deal from hearing phrases like “we’re saving for something bigger” or “we can’t afford everything right now, but here’s how we plan for it.”
Earning Versus Receiving
Another long-standing debate: should children earn pocket money through chores, or receive it unconditionally?
There’s no one-size-fits-all answer.
- Earning pocket money can teach responsibility and the link between effort and reward.
- Receiving it freely can allow children to practise decision-making without pressure — focusing on managing rather than “making” money.
Some families blend the two: a small base amount each week, with extra opportunities to earn more through additional tasks or helping out. What matters is clarity, that children understand the “why” behind what they receive.
Lessons That Last
Pocket money can spark big conversations about saving goals, needs versus wants, and the satisfaction of delayed gratification.
Encourage children to divide their money into three jars or accounts:
- Spend – for immediate treats or small joys.
- Save – for something they really want later.
- Give – to share or help others.
This simple system, recommended by MoneyHelper, mirrors real-world financial decisions and builds emotional intelligence alongside practical skills.
Talking About Money Matters
One of the biggest benefits of giving pocket money isn’t financial at all — it’s starting the conversation.
Money is still one of the least-discussed topics in many UK households. A 2024 survey by HSBC UK found that over half of parents admit they rarely talk to their children about money, often because they feel unsure themselves or don’t want to worry them.
But these conversations are where real understanding begins.
Asking simple, open-ended questions: “What would you do if you had £5?”, “How long would it take to save for that toy?”, or “Why do you think we pay bills every month?”; helps children link abstract ideas to everyday life.
The goal isn’t to create little accountants, but to build financial confidence and curiosity.
When children feel comfortable talking about money early on, they’re far more likely to seek advice, avoid risky decisions, and feel empowered as adults.
Pocket money becomes more than just a few coins — it becomes a language for understanding how the world works.
Bringing Pocket Money into Schools
Many UK schools are now incorporating pocket money discussions into lessons on numeracy, PSHE, and citizenship.
Teachers have introduced a “classroom economy” where pupils budget, trade, and vote on collective spending priorities.
This hands-on approach boosts money confidence and helps children understand fairness, teamwork, and the real-world impact of financial choices.
A Piece to Think About
Pocket money isn’t about the pounds and pennies, it’s about the principles.
It gives children a chance to practice decision-making, experience mistakes safely, and understand the effort that goes into earning. In a world where contactless payments and digital wallets make money almost invisible, these early experiences are more important than ever.
Next week, we’ll explore how families can teach one of the most fundamental lessons of all: the difference between needs and wants, a cornerstone of lifelong financial well-being.
