5 Tips for Giving Your Child Pocket Money is widely recognized as a useful tool for teaching kids responsible money management. Subtle adjustments made in childhood can spell the difference between a comfortable adulthood and a lifetime of financial stress. Unfortunately, schools do not teach children the fundamentals of personal finance, leaving it to their (sometimes overworked) parents to establish the appropriate teachings and practices. There is no one right way to use pocket money with your kids, but I hope these five suggestions will get you thinking about how you may use it to instill sound financial principles in your kids.
5 Tips for Giving Your Child Pocket Money
- Begin as early in life as you can
A 2013 study from Cambridge University found that at the age of seven, people’s attitudes toward money had already begun to take shape. Teaching your child to create a budget from an early age by setting aside a certain amount of money each time they are paid and dividing it into “save,” “spend,” and “gift” can help them become responsible with their money as an adult. To begin, you should assist your kid to create a savings goal (for a game, toy, etc.) so that they can become used to putting money down. This will teach children that if they work hard and are patient rather than demanding everything right now, they can buy even more expensive stuff. - Opt for a method that suits your needs.
Every family has different resources to offer their children, so it’s crucial to find a method that works for you and your children to teach them about the value of money. In order to teach their children about financial responsibility, parents can select from one of three primary methods. 5 Tips for Giving Your Child Pocket Money
With a points-based system, A reward system is a great way to motivate children of all ages to pitch in around the house, but it may be especially effective when used with younger children. As a result, kids learn that in order to make money, they have to put in some work. Those who sit around waiting for financial success have already been left behind.
Allowances are great for families who would rather not have to constantly keep track of whether or not their kids have completed duties in exchange for money. Talk to your kid about how they’ll be spending their allowance, and why certain things (like toiletries, clothes, and movie tickets) are necessities while others (like school books, hair cuts, and stationery) aren’t. It’s a great way to teach kids about money and help them appreciate what their parents do for them.
Financial support: Older kids who are mature enough to go out and find their own spending money will benefit the most from such a system. It may be something like tutoring, babysitting, dog walking, or working extra hours throughout the summer and winter breaks.
Thirdly, it is essential to maintain consistency. 5 Tips Giving Your Child Pocket Money 5 Tips for Giving Your Child Pocket Money
Consistency is a pivotal factor in habit formation. Allowing your child to get their allowance on a certain day of the week or month (you may call it “payday”) can teach them the value of saving and budgeting. Spending all their money in the first few days will teach them that two weeks is a long time between paychecks and that they will need to be more frugal if they want to have fun with their friends in the interim. 5 Tips for Giving Your Child Pocket Money 5 Tips for Giving Your Child Pocket Money 5 Tips for Giving Your Child Pocket Money 5 Tips for Giving Your Child Pocket Money
- Don’t worry about what other kids are receiving.
There are a lot of factors to consider when talking to your child about pocket money, which is why many parents find it difficult to discuss. How much pocket money you give your child depends on their age, your financial situation, and your expectations for what they will do with the money. Don’t go into debt attempting to provide your kids with an allowance that is on par with that of their peers. Give children a better understanding of the “real world” by being honest about your financial limitations. What matters more than how much money you make is what you do with it. - Make sure they have a solid foundation 5 Tips for Giving Your Child Pocket Money 5 Tips for Giving Your Child Pocket Money
Learn and practise your math facts. Some people may think that you need to be a mathematical genius to be excellent with money, but that is not the case. Simply practising the four fundamental arithmetic operations (addition, subtraction, multiplication, and division) will help you make better judgments in your day-to-day financial dealings. A solid grasp of mathematics directly correlates to fiscal acumen.
Make sure your kid is aware of the distinction between housework and paid work around the house. One is your obligation to provide for the household, and the other is your opportunity to be rewarded for going above and above.
The financial gap between assets and debts. Explain to your youngster that assets add to your wealth (i.e., increase your income), whereas liabilities reduce your wealth (i.e., cause you to spend more than you earn). You can earn or lose value with one possession but not the other.
