Parents should make a ‘contract’ with their children before giving them pocket money to teach them to spend and save wisely. 

That’s according to Home Show host and consumer expert Sinead Ryan, who believes it’s never too early to teach young people fiscal responsibility. 

“We leave it far too late to start educating our children about money,” she told The Pat Kenny Show. 

“Really, as soon as children can learn to count, they can start counting out coins.” 

An effective lesson in spending is creating a “contract” with your children regarding pocket money, according to Sinead. 

“It comes with really strict rules,” she said. 

“You sit down your kids and you say here's what you're now responsible for paying for – it could be sweets, it could be treats, it could be phone credit.” 

'Don't dig them out'

Sinead said parents should treat pocket money for children like an employer treats wages for staff. 

“If they blow it all - they're guaranteed to do that the first time you give them pocket money – you don’t dig them out,” she said. 

“You can't do that if you go to your employer and say, ‘I spent all of my wages on the first day, can I have a bump?’. 

“It's a really good discipline to teach kids.” 

Sinead suggested parents could agree to “top up” their children’s savings if they have been responsible as a further incentive to learn about money.

Pocket money and cashless spending

The introduction of cashless spending, according to Sinead, has made it harder for children to understand money. 

“That's much harder to understand than coins and notes,” she said. 

“It's a little bit old fashioned now to be thinking of money and coins and notes - but if kids don't learn that from the outset, they've no sense of the value of it. 

“But by all means, give them a Revolut Junior account.” 

She said parents should constantly reiterate the consequences of spending money and the importance of shopping wisely. 

“Let them compare brands, let them compare money,” she said. 

According to a report by NatWest in May, just 30% of families “commit to a traditional pocket money routine”.