Now some of you may feel that giving pocket money to younger children may not be a good idea. In fact, there are many who share the same opinion. The prime reason that parents choose to give pocket money to their children is basically to teach them how to manage money. It gives them a sense of responsibility that they have to spend the given amount of money wisely. And more importantly, they have to prepare a set of priorities as to what is more important for them to spend the given amount of money on.
Another thing that most children fail to understand is the concept of saving their money. Giving your child pocket money will help them understand that if they want something, they have to save their money and saving will also take time. For this, you can give them a piggy bank or open a bank account for your child where they can put their monthly savings. You can also ask your little one to save a certain percentage of money each month, if you want.
Read More: How to Teach Your Child About Managing Finance
A Guide for Parents on Giving Pocket Money to Child
When should you start giving your child pocket money?
According to the experts, a child should only be given pocket after the age of five or six. This is mainly because children who are younger than age of five or six won’t really understand the concept of pocket money and also, as to how and where they should spend the money. Now the main question is, how one should start with it?
So, one option is that you can introduce your kids by giving them small change to spend at times. Another option is, to give them a cash register and some coins. You can give certain advice to your child as in, where they should spend that money and more importantly, make them understand that once they have spent that money, there’s no coming back. So, they must think twice before spending each coin. To teach this, you can visit a nearby store with your child and give them the responsibility to pay for something.
Read More: 7 Money Concepts Every Kid Should Know
Teaching how to save money
But spending money is not the only option and what’s more important than that is, to save the money. The best option to teach this, is to give them a jar and ask them to put the change in that glass jar and let them observe how that money grows overtime. This will not only encourage saving money from a young age but also patience, as they will understand that either they have to earn enough money or save enough money to visit some place with friends or to buy that special chocolate.
How much money should your child be given?
Most of the children compare their pocket money with their friends’ and it is quite normal at this age. But it is your responsibility to make your child understand that they should not be too concerned with what their friends are getting. Apart from that, you have to choose the amount of money that you feel you will be able to afford each month and also, what amount of money your child can take charge of. However, you must also consider the basic needs of your child and if that particular amount will be able to fulfil his/her basic needs or not. This also depends on the age of your child, a child of an older age will obviously have different needs as compared to a younger one. For this, it is important for you to discuss the basic needs and not the ‘wants’ with your little one. It is important to discuss your expectations with your child, as what do you want your child to do with his/her pocket money. For instance, do you want your child to also spend their pocket money on paying for outings?
As per the experts, a child must be given 50 cents per week. This means, that if your little one is seven years old, $7 will be enough for his/her personal spending as well as savings. As your child gets older, you must increase their pocket money accordingly, keeping in mind their increased responsibilities and needs as well.
Is it okay for the child to earn his/her pocket money?
Many parents believe on paying their little one for doing household chores. Do you think this is the right way and if that should be done? Well, personally, I am not really in favour of this idea and I do have a reason for that. Your child is a part of your family and if he/she chooses to do any household work, he/she is contributing to the family welfare. If you choose to reward your little one for every single household chore that he/she does, they may not choose to do anything at times, unless they feel there is something beneficial for them in it. They will also not be able to develop a sense of responsibility under such circumstances.
Also, if your child decides to save up for something, it is perfectly fine to contribute a little into that from your side and choose to give them a little extra pocket money at times if they decide to contribute to additional household chores.
Do’s and don’ts
- You can either choose to give a weekly or monthly amount to your child. You must ensure that you stay consistent with the amount and also set a specific payday for giving the amount
- Do not get your child in the habit of borrowing money from you after you have given them their pocket money. This will lead to unhealthy money habits. Even if you decide to lend him money, make sure that your child repays it to you.
- It is your responsibility to clarify with your child if the pocket money is dependent on some certain behaviour and other aspect, or if it is permanent and unconditional.
- Many parents choose to take away the pocket money as a way to punish their child. However, you must be careful in doing that, as it may not always prove to be fruitful. It may also result in resentment and may even tempt your child to steal money from you or his/her friends. If your little one has broken something unintentionally, you can either ask him/her to pay for it or may even forgive them at times.
- If your child has spent all his pocket money, make him/her understand that they will have to wait till the next payday and they should have spent the money wisely.
Giving your child weekly or monthly pocket money is a great way to make your little one responsible enough to manage money matters. You must take his/her basic needs into consideration before you decide the amount of money that is to be given to them. Make sure that you stay consistent and discuss all the related factors with your child beforehand.