We have already established that it is important to teach your children good money habits while they are still young, and the best way to teach them is with the practical example of pocket money. This provides the perfect opportunity to teach your children about spending, saving, the concept of earning and the consequences of misplacing money or using it unwisely.
And if time-outs and grounding no longer work, you can also use the awarding of pocket money as a useful disciplinary aid, especially as your children get older – they will want money to go out with their friends, go to movies, go on dates etc. – and in order to make these ‘wants’ a reality, earning their ‘right to freedom’ will ensure that they do what is expected of them.
There are many debates as to how pocket money should be given, some experts say it should be earned, while others maintain that pocket money should simply be a given. Whatever you decide, remember to lay down the rules first and to stick to them.
Teaching your children the concept of earning money by “paying” them to do chores is a good way of entrenching the idea of earning a salary. Here are two ways you can “pay” your children:
Once you have paid them their wage, let your children make a few mistakes – like spending all their hard-earned money on sweets or a toy. Then when they see something they really want but have no money to buy it, you can use the opportunity to teach them to save.
In order to ensure that they can manage the effects of peer pressure, it is good to teach them about delayed gratification, and how saving and waiting for something that they really want makes the purchase that much sweeter – in some cases, your child could even get something better than they originally wanted.
Although research has shown that many parents introduce pocket money when their child is about six or seven years old, there are no hard and fast rules.
Your child might be ready to try managing some pocket money if he or she:
However you decide to use the concept of pocket money, remember that you and your relationship with money is your child’s ultimate example, so make sure you set a good one.