What should parents know?
Ah, pocket money. It can be a confusing issue in parenting: should you give your child pocket money, how much should you give and when? If this all sounds familiar, fear not. There might not be one right answer, but there are some tips to help guide one.
Why should children get pocket money?
Children don’t have to get pocket money. However, Lynn Beattie, a personal finance writer, broadcaster and mother of three, believes it’s good to familiarise children with budgeting, saving and spending as early as possible.
A pensions service manager, Lisa Davis, says: “Children who’ve been taught about money are more likely to feel confident when managing it and will save more regularly in later life.”
She adds: “Giving pocket money is a good opportunity for them to learn how to save and manage their money, make mistakes with small amounts of money and learn the value of things.”
Whether that’s a six-year-old learning how many sweets they can buy with N$10, or a 10-year-old saving up each month until they can afford a toy or game they want.
How can I teach my child about the value of money?
Davis says younger children can learn about money through play: “You could start by using coins and playing shop, adding price tags to items in their shop, using real coins and notes, maybe a toy till.”
She suggests: “Between the ages of five and six you can explain how money works, the difference between wants and needs, and why we save. This is the age you might consider giving small amounts of pocket money to help them save for something they want. Talk to your child to help them decide what to use it for, such as: all their treats, toys, books and magazines or just a few extras. From the ages of eight to 11, you can start talking to children about the banking basics, paying bills, budgeting and how credit works.”
You’ll also need to think about whether you give your child cash or pay directly into a bank account. Younger children may more easily understand the value of physical money, i.e. coins and notes, where older children may need to practise how to use a debit card and how to understand things like bank statements.
To decide how much pocket money to give your child, ask yourself:
• What is your budget?
• What feels age-appropriate?
• Why are you giving them pocket money?
• How will you be clear what the money is for e.g., food, snacks, entertainment, clothes, etc.?
• How often will you pay it, i.e., weekly, monthly?
• Will it be dependent on certain chores or behaviour?
• Will you give them cash or pay into a bank account?
• It’s also difficult, but important, not to sub your child if they run out of money before their next ‘payday’.
Should pocket money be tied to chores?
Whether or not to link pocket money to chores is another decision. The benefits can be that children learn the concept of ‘working’ to earn money, chores get done around the house and there are fewer arguments as everyone knows their ‘job’.
The downside can be if your child fails to learn that as adults we don’t get paid to do the housework, and they may start to expect rewards for other basic tasks. – BBC Bitesize
