If you had asked me years ago whether kids should have pocket money, I would have said no. I would have asked what they needed the money for; after all, we feed them, clothe them, and provide for their basic needs; what more could they ask for?
Growing up in Nigeria, most of us did not get monthly pocket money, even as teenagers, because it was simply not the norm. My parents or relatives would occasionally “dash”(give) us money, but this was never a regular occurrence.
I suppose I would have responded to that question based on my childhood experiences. This means that your decisions about pocket money may be influenced by your family’s circumstances and values.
However, I’ve now come to realise that giving kids pocket money, particularly tweens and teens, is a very positive thing. Read on to find out why.
Things To Consider Before You Give Pocket Money To Your Kids
According to research, teaching children financial education at school and at home increases their knowledge and understanding of money matters. Pocket money is an excellent way for parents to teach their children the value of money.
Giving them a small amount of money to manage allows them to put into practice what you’ve taught them about not wasting money. This, in turn, teaches them financial responsibility because they learn to spend their money wisely.
How much and how frequently you give your child pocket money depends on what you can afford, the child’s age, and your family circumstances.
However, before you give your child pocket money, you should consider the following:
- Have an open discussion with your child about how they can use their pocket money, such as saving for a goal, for their entertainment, donating to a worthy cause etc
- In the UK, you can open a bank account for children aged 11 to 17. This differs slightly from regular current accounts. Consider doing this and depositing a set amount of pocket money each week or month.
- Establish clear expectations for earning extra money ie sacrificing time and other resources. Pocket money, on the other hand, may be reduced or withheld as a consequence of poor behaviour.
- Set clear expectations if you want your child to earn pocket money for doing household chores.
- Explain to your kids why pocket money cannot be paid in advance. Consider a repayment plan if you supplement their pocket money. You will be teaching them about loans and repayment.
Why Pocket Money For Kids Is A Good Idea
1. Encourages Savings And Budgeting
Giving your children pocket money is a great way to teach them about budgeting and saving money. Allow them to create a budget and set monthly goals to see if they can meet them in a reasonable amount of time.
This will enable them to not only take responsibility for managing their own allowance, but also to gain a better understanding of how much things cost and whether or not they are getting a good deal.
2. Gives A Sense Of Control Over Their Lives
Giving children pocket money gives them the confidence to make small financial decisions with their pocket money. This gives them a sense of control over their lives. For example making a decision not to buy sweets for a few weeks in order to save up for a favourite game.
Giving your children pocket money teaches them how to manage money responsibly, which will benefit them in the future when its time to buy a car or a house.
3. Pocket Money Gives A Sense Of Independence
Pocket money gives children a sense of independence because it allows them to manage their own money and make mistakes along the way.
When children are taught about money from an early age and exposed to managing their pocket money. This will better prepare them to make good money decisions when they receive their first and subsequent pay checks.
4. Teenagers Can Learn Financial Skills for Independence
Consider increasing your teenager’s pocket money as they reach the age of independence. They can also earn extra money through casual work, some of which can be used to pay for things they need, such as gas for their car, toiletries, or their mobile phone bill.
Giving your child this financial responsibility will help them with budgeting and prioritising their needs, which are skills they will need when they become independent.
5. Pocket Money Encourages Kids To Use Their Maths Skills
Pocket money encourages children to put their math skills to the test. Allowing your children to handle real money requires that they constantly use their numerical skills to determine how much money they have.
They will also need these skills to make wise financial decisions so that their money will go further.
Conclusion
Pocket money is an excellent way to teach children about the value of money and how to manage their finances. Teaching money management skills to your child at a young age helps to prepare them for a secure financial future.
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