Growing up in my family, we had to do chores from a very early age. Whether it was washing the dishes, weeding the garden, or washing the car, each weekly chore we were assigned came with pocket money that we could spend any way we wanted. For me, this often meant saving up for several months to buy a new dress for my Barbie doll.

Now, don't get me wrong: as a child, I loathed doing chores. I am sure I moaned and groaned my way through them, only to turn on the charm when “payday” arrived. But looking back, I realise my parents were teaching me fundamental financial lessons.

When you think about it as a parent, you are your child’s first and most important teacher. While helping with homework is vital, some of the most crucial lessons are not taught in a classroom; they are taught at home. Earning pocket money for chores is an excellent example.

Beyond achieving a tidy bedroom or getting an extra pair of helpful hands, this practice is a powerful financial training ground. Linking chores to pocket money is not just about getting help around the house; it's about teaching financial discipline, which helps create a child who will become financially savvy, responsible, and independent.

Here are some of the key benefits:

Foundation for financial literacy

Financial literacy is the ability to understand and manage money effectively and is a skill desperately needed in life. Without it, even adults with high incomes can struggle. Earning pocket money provides the perfect, low-stakes environment for children to learn these essential lessons.

Understanding earned income

The first lesson is the most fundamental: money is earned. When a child receives $2 for loading the dishwasher all week, they internalise the direct link between effort and reward. This is far more powerful than simply being given money. It mirrors the real-world economy and sets a foundation for their future work ethic. They begin to understand that financial gain results from contribution and effort.

Power of choice and trade-offs

With their own earned money, children face real-world financial decisions. They quickly learn that money is a finite resource. If they spend their entire $10 on a magazine and hair ties on Monday, they cannot buy a new nail polish they see on Friday. This experience of a “trade-off” is a core economic principle. They learn to weigh desires against each other and start thinking critically about their spending.

Budgeting in action

A child saving for a $30 video game learns to budget naturally. If they earn $5 a week, they can calculate that it will take six weeks to reach their goal. They might decide to save $4 and spend $1 each week. This is a real-life budget in its simplest form. They are learning to plan their income against their outgoings, a skill that will be essential for managing a monthly salary as an adult.

Habit of saving

The discipline of delayed gratification is one of the greatest predictors of future financial success. Saving for a larger goal teaches patience and planning. The pride and sense of accomplishment a child feels when they finally make that purchase with their own saved money is immense. It reinforces the value of saving and creates a positive habit that can last a lifetime, helping them later save for a car, a house deposit, or their retirement.

Appreciating value

When a child buys a toy with money they worked for, they assign it a much higher value than if it were a gift. That $25 toy dinosaur now represents three weeks of taking out the bins and tidying their room. This new-found appreciation makes them less likely to break the toy or lose interest in it quickly. They become more mindful consumers, understanding the true cost of items in terms of the effort required to earn them.

Prevention of costly financial habits later in life

The lessons learnt from chores for pocket money encourage a proactive approach, helping to prevent common financial pitfalls in adulthood.

Combating sense of entitlement

When money is given freely without any effort, it can foster an entitlement mindset. A child may grow up expecting things to be provided without understanding the work required to afford them. Earning money dismantles this from the start, teaching self-reliance and the understanding that financial security is built, not given.

Reducing impulse spending

By experiencing the consequence of an impulse buy and having no money left for something they truly want, children learn to pause and think before they spend. This habit of mindful spending is a powerful defence against the “buy now, pay later” culture that traps many adults in debt.

Building healthy relationship with work

This system reframes work not as a chore, but as an opportunity. It teaches children that work is a normal, positive part of life that leads to reward and independence. This attitude can lead to greater motivation and success in their future careers.

The reality is, the pocket money you give your child for chores is more than just cash; it can be viewed as a “tuition fee” for the most practical finance course they will ever take. It teaches budgeting, saving, valuing what they have and more importantly, develops a healthy relationship with money.

These lifelong financial lessons give your child an invaluable head start. You are equipping them with the financial habits, skills, and mindset that will help them build a secure, prosperous, and independent future.

• Carla Seely has 25 years of experience in the international financial services, wealth management, and insurance industries. During her career, she has obtained several investment licences through the Canadian Securities Institute. She holds the ACSI certification through the Chartered Institute for Securities and Investments (UK), the QAFP designation through FP Canada, and the AINS designation through The Institutes. She also holds a MSc majoring in Business and Management from the University of Essex