Finance expert warns parents what they are doing wrong with pocket money

About one-third of Aussie parents increased their child’s pocket money in the past year, but the same number said the allowance wasn’t linked to any household chores.

As cost of living and inflation climbs, parents reported upping their child’s allowance in the past 12 months, but almost one third said the money wasn’t linked to household chores, sparking a warning from a personal finance expert.

The information was contained in a report provided to nine.com.au by comparison website and financial technology platform Finder.

The Parenting Report 2026 followed a survey of 1010 parents of children aged 12 and under to get a snapshot of how families in Australia are spending, saving and planning.

It found 28 per cent of parents of children aged 12 and under increased the amount of pocket money paid in the past year.

Seventy-three per cent of children received pocket money from their parents, and of those, 43 per cent were expected to complete chores, while 30 per cent received pocket money regardless.

The average amount of pocket money paid was $21.59 a week, or $1123 a year.

Boys fared slightly better than girls, with boys collecting $21.70 per week compared with $21.38.

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Of the parents surveyed, 63 per cent said the amount had remained unchanged in the past year, while 28 per cent reported it went up, and 9 per cent said it had decreased.

Dads are likely to shell out more. They reported paying an average of $26.58, compared with just $16.79 from mums.

A parent who spoke to nine.com.au said while she had always linked pocket money to chores when her children were younger, the practice had steadily eroded with each child and as they got older.

With only one child still collecting pocket money, she said she paid it directly into an account, regardless of whether she helped around the house, but occasionally put a freeze on the money as punishment.

Finder’s personal finance expert Sarah Megginson told nine.com.au paying pocket money was a great way to teach basic financial literacy, but warned children needed to work for the money.

“Whether that’s $5 a week or $25, what matters is that children are involved in the process and starting to understand money is something you earn, manage and grow,” she said.

Megginson, the author of How to Raise Rich Kids and a mother of three, said research showed kids who were given regular chores from the ages of three or four were more likely to become well-adjusted, successful adults.

“The goal isn’t just to hand over cash – it’s to plant the seeds of curiosity and confidence around money,” she said.

“Assigning kids paid chores is more about teaching responsibility and building confidence than expecting them to do a perfect job.

“When kids earn their pocket money through chores, they’re learning that effort has value, and that’s a lesson that will serve them for the rest of their lives.

Megginson knows what she is talking about. She started paying her children pocket money from the age of six and seven, using a reward system for helping around the house, but it doesn’t include all chores.

“My goal was to link the pay that they earn to the contributions they make to the household,” she told nine.com.au.

“There are some things they’re expected to do simply to look after themselves: make their bed, put their clothes in the washing hamper, put their dishes in the sink and keep their room tidy.  

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“For everything else, they earn points. We pay 10c per point, and each chore earns certain points.

“Stacking the dishwasher is 20 points, feeding the dog is 10 points, bringing in the washing is 15 points, that type of thing.”

The children are involved in adding their own points to a blackboard in the kitchen.

“It’s a trust system, but also if they forget to put points up, they miss out,” she said.

“They can earn bonus points for having a great attitude or being extra helpful − if they unstack the dishwasher and clean the kitchen without being asked, they’ll get a bonus.”

The children also get to choose when to cash in.

“My older daughters tend to want theirs more frequently; my 10-year-old son likes to save up for a ‘green note’, which is 1000 points.

“It’s taught them about work and reward, and I like giving my kids the opportunity to feel that sense of accomplishment that comes with contributing and completing tasks.”

Megginson said younger children in particular benefited from a sticker chart or pocket money app, and some parents paid pocket money directly into an account linked to an app rather than cash.

She also recommended parents taught children how to grow their money by placing it in a high-interest savings account especially for kids.

Sarah Megginson’s tips for teaching kids about money

Pay in cash (at least at first)

The world today is very digital and it’s harder to link work and reward if the money is paid in an app. We started with points to ‘gamify’ it and make it more engaging, but we always pay in cash and then offer to transfer it to their bank accounts if they want it saved. 

Talk openly about money

Do this as often as you’re comfortable with. The good, the bad and the ugly. From ‘Look at this great bargain I got!’ to ‘Wow that’s a high energy bill, we need to have shorter showers’. Talking about spending normalises the everyday stresses and benefits that money brings to our lives.

Involve them in money decisions

Don’t hide the budgeting process. Let them see you weigh up options, whether it’s picking a streaming subscription or planning a weekend activity. Get them tracking how much things actually cost versus how much they’ve saved for their own goals.