The KidiHealth team of daycare experts is often asked, “When is it the right time and when is it the wrong time to introduce pocket money.” Our answer is simple: it very much depends on your family, the motivation behind it and how ready and able your children are to learn about and understand the value of money. But then it can quickly get complicated as soon as you face issues such as when do you start giving it, how much do you give, should it be earned, how often should it be paid, are there any conditions attached, etc.
The KidiHealth suggestion is to keep it simple. Naturally, you want to teach your children about the value of money, and you also want to teach them that saving is also a key part of the pocket money experience. We know that teaching your child to save a little each week to buy something bigger later can be a difficult concept for many children to accept.
Once your children can count confidently and understand the idea of having a certain quantity of something, your children are ready to understand the concept of pocket money. But right at this point, parents should consider the long-term implications of giving pocket money and whether you want to attach any conditions to it. Some parents decide on a set amount, to be increased year on year until a child becomes a teenager, at which point the process will be re-evaluated. You may wish to teach your child about saving by imposing a mandatory savings scheme on a certain amount of the pocket money.
Some children become highly motivated by money and the idea of earning it. Within reason, this is a good thing and should be nurtured in the right way. You can even start to teach your child about earning a bonus by completing extra chores, exhibiting outstanding behaviour or performing kind acts. As you can see, pocket money is a fantastic tool, not just for teaching your child about money and arithmetic but also as a way of motivating them to achieve more by building a desire within them to strive for things that they want.
Children are naturally curious, and the tendency to spend all their money at one time is often too tempting, so KidiHealth suggests you teach them about saving and borrowing. Borrowing is usually a big hit at first, as the idea of being able to borrow from their next week’s pocket money so that they can have a bigger, better item this week is just too good an opportunity for many children to pass up. Unfortunately, there are often tears and feelings of devastation the following week when they get little or no pocket money as a result! This will send a message that borrowing is fine, but as long as you are prepared for the payback or to go without until you are in a position to have full pocket money again, your children will need to be able to live with that decision.
In comparison to borrowing, savings seem far less glamorous, but this is the opportunity to explain to your children that they should have a ‘savings jar’. The savings jar becomes their visual savings account, and it is something that they will remember fondly as they grow older.
Once your children have grasped the concept of pocket money, savings and borrowing, you can explain to them that the same principal applies to any other money that they receive over the year. Perhaps they would be wise to save some of their birthday money and discuss what they may like to buy later in the year if they have saved enough. With that in mind then, you can ensure that your children do get the rewards for their hard work at savings so that they understand the full impact of a good reward for saving.
In summary, pocket money is about teaching children that you can have anything you want as long as you’re prepared to work for it and save towards it. The lessons your child can learn through pocket money are endless. The real value isn’t in the amount of money you give them but rather in the understanding they will gain on how best to manage the money they have and plan well for the future.