Is it really necessary? As parents of older children, you are probably all too familiar with those gruelling discussions about whether your child really needs that jumper they’ve been asking for, or whether they really need a specific pair of branded trainers, or whether they have to pay for those replacement headphones with their own pocket money. A youth salary is suitable for children aged 12 and up and will spare you a lot of awkward and largely pointless conversations.
Youth salary instead of pocket money: how to calculate it for your child
Put an end to awkward conversations about money: with a youth salary, parents give their children more financial responsibility, helping them to learn how to manage money. A youth salary is suitable for girls and boys aged 12 and up. We will show you how to calculate it, step by step.
Monthly youth salary instead of pocket money
Here’s how it works: instead of getting pocket money for little treats, children are instead given a larger, fixed amount by their parents each month and are responsible for managing this themselves. They use their youth salary to cover certain essential everyday costs. This may include money for clothes, mobile phone costs or leisure activities. “This method teaches children the real cost of living and forces them to start budgeting and accept responsibility for their money,” explains Andrea Fuchs, psychologist and President of the Youth Salary Association (Verein Jugendlohn) .
How to calculate a youth salary
But how do parents calculate a youth salary that suits the family budget? As a general rule, parents should use the amount they already spend on their child as the basis for the salary. “It is important for both the parents and the child for the salary to be realistic,” says Andrea Fuchs. “It should reflect what you already spend and not be higher than the family budget can afford.”
These steps will help you to find the right amount:
Step 1: Decide what expenses your child’s youth salary should cover
First of all, it is a good idea to decide on the areas where you want to give your child financial and decision-making responsibilities. It is important for both parents to agree. The youth salary should only cover the costs for personal items that would otherwise be purchased by the family. For instance:
- Bike/moped costs (maintenance/repairs), travel costs for public transport
- Special toiletries, e.g. make-up
- Exercise equipment and sportswear
- Mobile phones, computers and other digital devices (purchase costs)
- Mobile phone subscriptions/prepaid mobile costs
- Stationery, pencil cases, etc.
- Meals out
- Pocket money (e.g. for games, sweets, concerts, etc.)
You should generally exclude the following costs from the youth salary:
- “Board and lodging”, laundry, etc.
- Insurance, illness, tuition, musical instruments
- Any family activities such as holidays and excursions.
Step 2: Compile all current expenses
Compiling all current expenses is the most time-consuming part of the whole process, but it is well worth going over costs very carefully. You have the following three options for ensuring a realistic item-by-item cost breakdown:
- Write down all the expenses you incur for your child for two to four months.
- Make a list of your child’s annual needs for clothes, haircuts, leisure activities, etc. and how much the individual items might cost in your family.
- Estimate the total amount based on your own experiences.
Step 3: Calculate the monthly salary
Now select those items you initially decided on for your child’s youth salary and add on the pocket money you give your child each year. All you have to do is divide that sum by 12, or 13 if you would prefer to give them a 13th month of salary in November for winter clothes and savings. This will give you the monthly amount that you will pay your child or transfer to their account.
Once you have defined a youth salary, it’s time to implement it
You have now defined the basis for the youth salary. What next? Now you have to implement it. The Youth Salary Association has four helpful tips.
It’s important that children are able to distinguish between expenditure on leisure time activities (e.g. tickets to an amusement park), essentials (e.g. a new winter coat) and saving up in the long term for more expensive items (e.g. a new bike or snowboard). If you decide to factor more expensive purchases into the youth salary, it may be worthwhile for your child to save up the relevant amount in a separate savings account.
When your child pays for their expenses using the PostFinance Card or PostFinance TWINT, the account statement offers a good overview of their personal cash flows. Otherwise, your child can keep a rough record of their finances so they can compare income against expenses. This is easy to do by hand or with a budgeting app.
Find out more about the budgeting app from the Swiss Budget Advice Association at The link will open in a new window budgetberatung.ch (in german)
We recommend using a prepaid credit card for online purchases. This will allow your child to shop online or download songs, but only if they have put money from their youth salary on the card beforehand. Prepaid credit cards permit the holder to spend only money that is actually available.
PostFinance TWINT is suitable for in-store payments or online orders. You can also transfer additional income to your child quickly and conveniently. Or your child can simply use PostFinance TWINT to request an amount from you – such as for shopping they did for you.
Tell your child how they can earn additional money if their spending needs exceed their youth salary – for example, by babysitting, running errands for elderly neighbours or helping out in your own household with activities beyond their normal chores.
More independence – not just with money
As a parent, you might well be wondering how this youth salary idea could possibly work. Won’t your children just spend all their money in the first half of the month and mainly buy things they don’t even need? Look at the youth salary as part of the overall process of teaching your child to be more independent – in all areas of life. Giving your child money for their own needs is just one part of that. As parents, you should think about and discuss with your child where they could take on even more responsibility – maybe for their own room or within the family. Joint decisions will help to make your efforts a success.
Remain firm about the monthly salary
“When it comes to the youth salary, it is particularly important for parents to remain firm,” says psychologist Andrea Fuchs. “Don’t help your children out by giving them extra money if they’ve potentially spent a bit too much and are running out of cash. But do be prepared to give them advice.” By doing so, parents can teach their children to prioritize what they buy and to be realistic when spending money – which will provide them with a solid foundation for later in life.
Request the The link will open in a new window youth salary calculation table (in german) free of charge from the Youth Salary Association.
You can find a free course on financial literacy at The link will open in a new window moneyfit.ch (in german).