Pocket Money Guide NZ - First Income for Kids and Teens
💰 Pocket Money and Earning Your First Income
Pocket money is how most New Zealand kids first learn about money. It might be a fixed weekly allowance, payment for doing chores, or a mix of both. As kids grow into teenagers, pocket money evolves into real income from babysitting, mowing lawns, paper runs, and eventually first jobs at cafes, supermarkets or fast food outlets. This guide covers how pocket money works, how much is typical in NZ, the tax rules for young earners, the three-jars saving method, opening a kids bank account, and the transition from pocket money to a first real job. Written for parents, teachers, and young people starting out.
Why Pocket Money Matters
Pocket money does more than buy ice cream. Research by the Retirement Commission (Te Ara Ahunga Ora) shows that children who handle money from a young age develop stronger financial habits as adults. The key lessons pocket money teaches:
| Lesson | How Pocket Money Teaches It |
|---|---|
| Scarcity | Money runs out if you spend it all. There's only so much per week. |
| Patience | Saving for a bigger thing means saying no to smaller things now. |
| Choice | If I buy this, I can't buy that. Trade-offs are real. |
| Work and reward | Chores done equals money earned. Effort produces results. |
| Mistakes are safe | Blowing $5 on something useless at age 9 teaches a lesson that costs $500 at age 29. |
How Much Pocket Money Is Normal in NZ?
The three questions parents actually ask are answered directly below, then the general pattern follows.
How much pocket money for a 10 year old?
About $10 a week on the common $1 per year of age rule. At ten, most children can handle a weekly amount and a simple saving jar, and the money is usually for small treats rather than for covering any real costs.
How much pocket money for a 12 year old?
About $12 a week on the same rule. Twelve is the age many NZ families start attaching part of it to chores, and where a bank account with a debit card starts being genuinely useful rather than a novelty.
How much pocket money for a 13 year old?
About $13 a week, and this is the age the amount usually stops being the point. Thirteen year olds can earn beyond pocket money, and most families shift towards paying for specific jobs and letting the teenager cover some of their own spending.
There's no official guideline, but surveys of NZ families consistently show pocket money roughly tracks age. A common rule of thumb is "$1 per year of age per week":
| Age | Typical Weekly Amount | What It Usually Covers |
|---|---|---|
| 5 to 7 | $2 to $5 | Small treats, occasional toy, something to save for |
| 8 to 10 | $5 to $10 | Snacks, small games, saving for bigger items |
| 11 to 13 | $10 to $20 | Phone top-ups, school tuckshop, social outings |
| 14 to 16 | $15 to $40 (or first job income) | Clothes, social life, transport, phone |
Three Allowance Models
1. Fixed allowance (no chores attached): Paid weekly regardless. Chores are expected as part of family life. Teaches budgeting but not effort-reward.
2. Chores-for-pay (no fixed allowance): Every dollar earned through specific tasks. Strong work ethic lesson.
3. Hybrid (base allowance + bonus chores): Small fixed amount plus extra for bigger tasks. Most balanced approach.
🏺 The Three Jars Method and Building Saving Habits
One of the most widely taught beginner money systems in NZ schools is the three-jars method. Every time money comes in (pocket money, birthday money, chore pay), it gets split between three jars.
The Three Jars Split
| Jar | Suggested Share | Purpose |
|---|---|---|
| Spend | 50% | Immediate fun, small treats, day-to-day |
| Save | 40% | Building up for something bigger (bike, game, trip) |
| Give | 10% | Donating, gifts for family, helping others |
The exact split can flex, but the principle matters more than the percentages. Splitting every payment immediately (before spending any of it) trains a habit that lasts into adulthood. Adults who "pay themselves first" into KiwiSaver and savings accounts are doing the same thing.
Opening a Bank Account for a Child
Every major NZ bank offers kids' accounts. These are usually fee-free, pay a basic interest rate, and can be opened from birth with a parent as joint signatory.
| Bank | Product | Age | Key Features |
|---|---|---|---|
| ASB | Clever Kash + Headstart Saver | 0+ | Digital piggy bank app, tap-to-save with a virtual elephant |
| ANZ | ANZ Go + Serious Saver | 0+ saver, 13+ Go | Teens get EFTPOS card, app access |
| BNZ | YouMoney (kids profile) | 5+ | Own section in app, virtual accounts, savings goals |
| Kiwibank | Fast Forward Saver | 0+ | Bonus interest if only one withdrawal per month |
| Westpac | Bumps + Kids First Saver | 0+ | Upgrades through childhood stages |
From age 13 or 14 (bank-specific), teens can usually get their own EFTPOS card with parental approval. From 16 they can typically open accounts independently. All banks require ID: a passport or birth certificate for younger kids, plus the parent's ID.
Interest on kids' accounts: Bank interest IS taxable income. Banks apply RWT automatically. Give the bank the child's IRD number to set their RWT rate to 10.5% (the correct rate for most kids). For typical balances the tax is trivial.
👷 First Real Jobs, Minimum Wage and Tax for Teens
From around age 14, many NZ teens start earning real money from real jobs. Once a young person earns income from an external employer, normal PAYE rules apply. Pocket money from parents isn't taxable; wages from an employer are.
Minimum Wage for Young Workers
The Employment Relations Act 2000 and Minimum Wage Act 1983 set out what employers must pay. As of April 2026:
| Category | Minimum Rate (April 2026) | Who Qualifies |
|---|---|---|
| Adult minimum wage | Around $23.95/hour | 16 and over (general) |
| Starting-Out wage | 80% of adult ($19.16/hour) | 16 to 19-year-olds meeting specific conditions |
| Training minimum wage | 80% of adult ($19.16/hour) | Workers 20+ in industry training of 60+ credits/year |
Under-16s aren't covered by minimum wage law at all, though most employers pay at least Starting-Out rates voluntarily. Some jobs hire from 14 or 15 at rates in the $15 to $20 range.
Starting-Out wage applies only to: 16 or 17-year-olds in their first 6 months with the employer; 18 or 19-year-olds who've been on a benefit for 6+ months before starting; or 16 to 19-year-olds doing industry training of 40+ credits/year. After 6 months with the same employer, 16 and 17-year-olds MUST move to the adult minimum wage.
Tax Rules for Young Earners
NZ tax brackets are the same for everyone regardless of age:
| Annual Income | Tax Rate (2026/27) | What It Means for a Teen |
|---|---|---|
| $0 to $15,600 | 10.5% | Most teenage earners sit here |
| $15,600 to $53,500 | 17.5% | Full-time teen work or gap-year earners |
| $53,500 to $78,100 | 30% | Uncommon for under-18s |
Children DO need an IRD number to be paid by an employer. Parents can apply for one at any age (free, takes 8 to 10 working days through IRD).
Payslips and Tax Codes
When a teen starts a real job, several things happen on their first payslip:
Tax codes for teens: Most teens use M (primary income, no student loan). If they have a SECOND job, that becomes SB, S, SH or ST depending on total income. Using M on both jobs leads to a tax shortfall at year-end.
KiwiSaver and under-18s: Under-18s CAN join KiwiSaver but are NOT auto-enrolled. Employer contributions for under-18s are not compulsory (check with employer). From 1 July 2025 the annual government contribution was halved, and under-18s do not receive it. Joining early still builds the saving habit.
Common First Jobs
- Paper runs: From age 11 or 12. Typically $30 to $80 per route per week.
- Babysitting: From around 13 to 14. Usually $15 to $25 per hour.
- Lawn mowing, dog walking, car washing: From 12. Typically $20 to $40 per job.
- Supermarket or fast food: From 15 to 16. Starting-Out or adult minimum.
- Retail and cafes: From 15 to 16. Starting-Out wage commonly.
- Summer holiday work: Orchards, horticulture, hospitality. Seasonal.
🔢 Worked Examples
Example 1: 8-Year-Old with Three Jars
Profile: Mia, 8, Hamilton - $8 weekly pocket money, saving for a $60 Lego set.
Example 2: 12-Year-Old with Hybrid Pay
Profile: Jacob, 12, Christchurch - base $10/week + chores. Goal: $400 bike by Christmas (36 weeks).
Example 3: 15-Year-Old with Supermarket Job
Profile: Aroha, 15, Auckland - 8 hours/week at $20/hour, tax code M.
Example 4: 17-Year-Old Saving for a Car
Profile: Riley, 17, Tauranga - 15 hours/week at $22, budget $5,500 for used car.
Example 5: Starting KiwiSaver at 16 vs 18
Two teens, both earn $8,000/year at 16 and $60K/year from 18.
Real-World Story: The Chore Menu That Worked
Three kids aged 8, 10 and 13 with a printed chore menu on the fridge.
The Menu:
What Happened:
- Middle child saved $480 in a year for a scooter
- Eldest preferred big jobs (mowing, weeding)
- Youngest stuck to small tasks, learned consistency
- All three learned effort vs reward
Lesson: A clear chore menu with posted prices removes emotional negotiation. Kids learn work ethic as a system, not a guilt trip.
Real-World Story: The First Payslip Shock
His Expectations:
12 hours × $18/hour = $216 "in my pocket". Planned to buy $180 sneakers in first week.
First Payslip Reality:
Lesson: Gross is what you earn. Net is what you get. PAYE and ACC together eat about 12% of every dollar. Every first job has this moment. Teaching teens to check payslips line by line from day one prevents surprises later.
Real-World Story: Two Jobs and the Wrong Tax Code
Two part-time jobs, used M tax code on both.
What Went Wrong:
Lesson: If you have two jobs, the second needs a secondary code (S, SH, ST or SA). Getting it wrong doesn't mean you get away with less tax; it means you owe a lump sum at year end.
Real-World Story: Jars That Saved the Day
Two kids aged 9 and 11 who blew their pocket money every week on sweets.
The Fix:
- Three labelled jars ($6 from The Warehouse)
- Every Sunday, pocket money split immediately 50/40/10
- Save jar locked away, only opened for goal purchases
- Give jar donated to SPCA at Christmas
Results:
- After 8 weeks, older child saved enough for a $45 book
- After 6 months, younger child had $70 toward a bike
- Mid-week begging stopped completely
- $42 SPCA donation became a family tradition
Lesson: Physical separation of money into visible jars makes the abstract idea of saving concrete for young kids. $6 of jars taught a habit worth thousands.
🎯 Test Your Knowledge
Quiz on Pocket Money and First Income in NZ