From dance lessons to movie tickets, tuck-shop money to braces, if you’ve got a growing family then it can be easy to start thinking of your beautiful children as the worst financial decision you’ve ever made. No matter how generous you are, parents are geared to feel guilty for not giving their children enough time, attention or money. But is this guilt warranted? Or are you spending too much, unwittingly grooming your children to be entitled teenagers and ungrateful adults?
When it comes to pocket money, gifts, and traditions like the tooth fairy, how does what your spending compare to the average family?
How much should I spend on pocket money?
Currently, over 50% of children who live at home receive a weekly sum of pocket money. Of course, this varies depending on the age of the child, but on average parents give their children $16 per week, which adds up to $832 per year. In total, Australians give their kids $1.4 billion each year – staggering, isn’t it?
So, how much is too much? Many parents choose to set their child’s pocket money based on a simple formula, such as 50 cents for each year of their life. For example, an 8 year old would get $4 per week, while their 12 year old sibling would get $6 per week. If this seems a little low, how about $1 for every year? By setting a formula which increases with age, the amount you spend will rise predictably, in line with your children’s needs. This allows you to budget accordingly and ensure spending is equal between siblings.
Another idea is to set their allowance based on how much you would normally spend on your child for miscellaneous items and treats per week or month, so that it falls in line with your current budget.
Some parents choose to pay their children for doing chores around the house, although a number of experts do advise against this, saying that if you tie chores to their pocket money, your child will come to expect payment for any little thing they do around the house.
How much should I spend on gifts for my children?
Christmases, birthdays, celebrating achievements – it’s natural to love giving gifts to your children. In fact, over 70% of men agree that giving gifts is a great way to show children that you care. But although presents can be a fun and rewarding way to spoil your loved ones, over 85% of parents believe that the expectations of their children regarding gifts are becoming increasingly expensive and unrealistic. So how much spending is ‘normal’ when it comes to Christmas and birthday presents?
While the amount we spend will vary depending on our family budget, here are some general guidelines that may be helpful:
- Be wary of equating big spending with love. Avoid the temptation to overspend, particularly as an apology, for example, for not spending enough time with your children.
- Think about what your children already have and avoid duplicates. Buying them something they really need is a way to spoil them without throwing money down the drain.
- When thinking about what they need, factor in gifts they’re likely to get from other people such as grandparents and extended family.
- Spend the same amount of money on each child if you have more than one. Divide your Christmas gift budget up equally, or set aside a specific budget for birthdays. This not only maintains fairness between children but also works as an incentive to keep your gift spending within a clearly defined budget.
- It makes sense to increase the gift budget as your children age. You’ll probably want to spend more on your child as they become teenagers than you did when they were toddlers.
How much should I spend on gifts for parties?
As if budgeting for presents for your own child wasn’t enough, today’s parents also need to budget for gifts for friends’ parties. Depending on how many invites your child receives, this can prove to be incredibly costly. A general guide might be to set a limit of between $10 and $15 for classmates, and between $15 and $25 for close friends, depending on your family budget.
How much money should the Tooth Fairy leave?
Twenty years ago, most children would have expected $2 under their pillow when they lost a tooth. Ten years later, it had risen to an average of $3. Fast forward another decade and the cost has almost doubled, with the average cost per tooth coming in at $6. Multiply it by the number of teeth a child loses and it adds up, with Australians now spending $240 million in tooth fairy money each year.
If you’ve got a large family with many baby teeth still intact, you may want to crunch the numbers and work out in advance how generous your tooth fairy can afford to be, to avoid over-committing. It’s a difficult balance to strike. You don’t want to be the parents who cop backlash from friends and neighbours for setting unrealistic tooth fairy standards which others don’t want to compete with. Conversely, no one wants a reputation as the frugal tooth fairy. If you’re worried about not being as generous as other parents, you can always explain that the Tooth Fairy pays more for teeth that have been regularly brushed and flossed, to encourage good dental hygiene. And remember to keep a stash of notes or coins ready for such eventualities, as children can lose teeth at the most inopportune times, and you don’t want to disappoint them. Or worse, be left with nothing in your wallet except a $100 bill, which was Kourtney Kardashian’s defense when she received criticism for her outrageous tooth fairy spending.
Every family is different
While knowing what other families are spending on their kids is a helpful indicator, your personal family budget and financial goals should be the driving consideration. After all, what kids really want are parents who are generous with their time and attention, and ‘keeping up with the Jones’s’ is definitely not worth getting in debt for.