Principles underpinning pocket money and savings for children and young people

The following principles should guide the payment of pocket money to looked after children and young people:

• having pocket money is good for the child/young person. It gives a sense of independence and a measure of choice in making decisions about how the money is spent
• receiving pocket money helps children understand the value of money and is the start of developing budgeting skills
• carers must encourage children/young people to open a personal savings account. This should be part of the placement agreement meeting and plan
• if the personal allowance element of the basic allowance paid to the carer is not all used for pocket money and items the child/young person may need, the remainder should be paid into a savings account in the child's name or into a Child Trust Fund, which will have been established for any child born on or after 01 September 2002, and before 02 January 2011. For children born after 03 January 2011, or before September 2002, Junior ISAs replace Child Trust Funds. The child's savings or pocket money should be placed in a personal account opened in the name of the child/young person. You should be flexible about how pocket money is paid. Whilst at primary school a fixed weekly amount is reasonable. When a young person becomes a teenager a monthly allowance to cover pocket money, clothing and other larger personal items should be considered (depending on their maturity and situation) and discussed with them
• the amount to be paid must be clarified at the outset of a placement and addressed within the placement plan. The rate of pocket money paid should be kept under review by all concerned. Setting the appropriate level is dependent on close communication between the carer, child/young person and their social worker and your supervising social worker. If a child/young person is not happy with amount paid, it should be clear how they can raise their dissatisfaction
• increase pocket money by a fixed amount at each birthday. In many families an understanding may be reached that once a child is old enough to help out with basic household chores, top-ups to pocket money can be arranged in exchange for jobs done. In some foster placements this could be appropriate, especially in long term placements where such an understanding and trust could be built up over time. In shorter term placements this may be less easy to achieve or inappropriate
• achieving the right level of pocket money/monthly allowance is dependent on carers knowing the child/young person well and having a trusting relationship, with the child/young person developing a good understanding of the foster family’s culture regarding use of money
• as a child gets older s/he may want more expensive extras which can be reflected in pocket money or be paid for by the carer out of the basic allowance received
• to promote a child/young person’s positive contact with their birth family top-ups to their pocket money will need to be made to enable birthday and Christmas presents to be bought for birth and foster family members
• it would be unfair if foster children received either more or less than the foster carer’s own children where their ages are similar
• the rate of pocket money paid to young people should be realistic. It is the responsibility of carers and social workers to help ensure the smooth transition to independent living after foster care. It would be unhelpful to this process if a young person’s pocket money enabled her/him to enter in to a lifestyle which was not possible if s/he later had to live independently
• the withholding of pocket money as a punishment is not permissible and alternative acceptable sanctions should be used instead.

Pocket money guidelines

Pocket money should not be paid to children under 5 years old. The significant change involved in a child moving to secondary school is reflected in pocket money paid. The following guidelines should normally be followed:

Personal allowances for a child/young person placed

Fostering Network recommend that within the basic weekly allowance there is a ‘personal allowances’ element. This is intended to cover both pocket money and other personal expenses for children and young people which could cover such items as cosmetics, deodorants, sanitary protection, shaving equipment, dry cleaning, landline and mobile telephone calls and comics. It is important, particularly with older children, to be clear from the start about who pays for what! Some households will continue to supply many items as part of the weekly ‘shop’ or from the general housekeeping pool. There needs to be discussion at the outset of the placement about how much of the personal allowances element should be paid to the carer and how much to the young person, as pocket money.