- Why should you give pocket money to your kids?
- Are there any disadvantages of pocket money?
- Frequently asked questions about pocket money for kids
Depending on your circumstances, it’s a good idea to start teaching your kids about money and finance early on. These lessons can range from teaching your kids to spend less, save more and respect that money is not infinitely available.
While there are many ways to teach your kids about money, giving your child can be the perfect way to educate your children.
This article talks about the benefits of giving children pocket money and how parents can get started. For any parent that intends to start giving their children pocket money, this article is a must-read.
Why should you give your kids pocket money?
Giving children pocket money has many benefits. Listed below are a few of the benefits:
Teaches kids the value of money
The sooner kids start using money, the faster they will learn to appreciate the value of it. In a world where social media influences everything we buy and how we think, kids can easily get brainwashed into purchasing things that they don’t necessarily need.
Many purchases today are driven by FOMO (Fear of Missing Out). This essentially means that kids feel they are missing out on material items and necessary life experiences when they see their friends posting about their lives on social media.
Encourages children to save
By giving pocket money, you can teach your kids about the value of savings. When kids receive pocket money, they begin to spend it on their own, which is when they learn more about expenses. By understanding how much things cost, kids can grasp the concept of saving money to buy something they want.
For instance, imagine your kid wants to buy a toy worth £15, but his pocket money is only £5 per week. So to buy this toy, they will have to save their pocket money for 3 weeks. 🧸
By learning the concept of saving through pocket money from a young age, children will develop a lifelong habit of saving money and appreciating delayed gratification.
Being exposed to such situations in real life encourages them to think about good money habits like savings. As a parent, you can help your child plan how much they would need to save to buy something or reach their saving goal. 💸
Teaches kids about money management
Pocket money can teach kids self-discipline and learn about money management. Moreover, it will make your children realize that money isn’t an unlimited resource. This will encourage them to save and prioritize what they spend their money on.
In addition, your children will also learn how to budget which will help make them financially responsible and improve their decision-making skills.
They can learn from their mistakes
With money in their pocket, kids can buy things they want, and sometimes they tend to overspend on something they could’ve done without. When kids get pocket money for the first time, they often make such mistakes. This might sound like a drawback, but in reality, it’s beneficial as it lets your kids learn from their mistakes at an early age.
It’s essential that they make such financial mistakes when they’re young and only have access to small amounts of money. Moreover, learning from such experiences will help them make better financial decisions in the future.
Are there any disadvantages of pocket money?
Overall, giving pocket money is beneficial. However, there are a few things that can go wrong, such as:
- They might spend it all - It's possible they are not able to manage money and end up spending it all without thinking about the consequences.
- Unhealthy comparisons with other kids - Kids are very active on social media platforms where many people like to show how they're spending money. This can lead to unhealthy comparisons with others. However, you must teach them to use social media responsibly and teach them that having a limited budget is a good learning opportunity for financial planning.
- They can spend it on bad things - It's possible that your kid might use the pocket money on illegal substances and inculcate bad habits. You should have a conversation with your child and make them aware of how such things can be harmful. Thus, it’s possible that without any supervision, your child might get themselves into trouble because of money.
- They might get bullied in school - Unfortunately, bullying in schools is quite common. It’s possible that your child might get bullied if they carry too much money.
- They might think that they’re entitled to get pocket money - When you give pocket money to your children regularly, they might start believing it’s their right to receive pocket money rather than viewing it as a privilege and a learning experience. This attitude will hamper their learning as they will not grasp the value of money.
Frequently asked questions about pocket money for kids
1. Why should I give pocket money to my children?
The main aim of giving pocket money is to teach your children the concept of money and help them better understand how money works from a young age. In addition, the idea is to get them started early so that they can become financially responsible and manage their money better when they grow up.
2. When should I start giving pocket money to my child?
There is no right time to start giving pocket money to your children. It all depends on when you feel it is the right time to begin. When you should start depends on the following factors:
- How ready is your child to understand the value of money and manage it?
- What is the purpose?
- How comfortable is your family to start giving pocket money?
To determine if your child is ready, you can look for the following signs:
- They understand what money is and how it works.
- They understand that money can be used to buy things.
- They have some idea about the concept of saving money.
3. How do I start giving pocket money?
The purpose of giving pocket money is to teach your children the time value of money and get them to start managing it themselves. Thus, once your child has a basic understanding of money and how it can be used, you can consider giving them pocket money.
You should look to keep things simple and give them a fixed amount every week or month when you start. Moreover, you should encourage them to save some of it rather than spend it all. This will help develop good money habits from a young age.
The key is not to stress too much about when you should start. What’s more important is that you take the initiative and help your kid learn more about money.
4. How much pocket money should I give my child?
According to a survey by Rooster Money, children in the UK generally receive approximately £5 per week as pocket money. However, It has also been found that, on average, older children get more money.Source: Statista
While the statistics can be used for reference, how much pocket money you give should depend on your parenting style and financial condition. It’s vital only to give as much pocket money as you can afford.
Moreover, it would be best to consider your child's age and maturity to determine the amount of pocket money you give. You should give them as much pocket money as much as would enable them to fulfil their needs and, at the same time, allow them to save some of it every month.
You can also consider using a Pocket Money Savings Calculator to determine how much pocket money you should be giving to your children. It will also allow you to compare your child's pocket money with that of other kids of a similar age.
5. Should pocket money be linked to chores?
Again, how you plan to start giving pocket money to your child depends on your financial situation and your family’s values.
This is because, while linking chores to pocket money is common, how different families function and how much they can afford depends on them.
For instance, in some houses, children help by doing age-appropriate chores from an early age whereas, in others, children don’t start helping around the house until they’re teenagers.
In general, linking money to chores is a good idea as it helps children understand the correlation between work and getting rewarded for their efforts in the form of money. From a young age, this teaches children that money doesn’t grow on trees, and to earn it, they have to work hard.
If you link pocket money to chores, it would be best to explain the chores clearly to avoid any confusion. It would also be helpful if the chores were regular so that your child could get pocket money regularly. Some common chores include:
- Washing up
- Washing cars
- Cleaning their bedroom or bathroom
- Doing their laundry
- Buying groceries
Pocket money is an important aspect of raising your children. By giving pocket money to your kid, you can teach good money management habits early. Moreover, they can make mistakes that allow them to learn while they’re still young.
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