How to Tackle Pocket Money

The news has finally reached your ears that your child’s friends are now getting this wonderful thing called pocket money – time to make some quick decisions. Grab this chance to teach your child the importance of money and instil in them a healthy attitude towards their finances. Having their own stash of cash will give them independence and the opportunity to learn about saving, spending and donating. Lessons like identifying the difference between a want and a need are easier to grasp when the purchase of the latest craze must be funded from their own pocket. Your guidance is important but remember to let them make mistakes and learn valuable lessons, while the consequences aren’t so serious.

The trouble is, things have changed quite a lot since you used to receive 50 cents a week to spend on Chappies. Here are some tips for how to do it now:

  • When to start

If the catalyst isn’t a story brought back from school, a good indicator of readiness is when they have grasped basic maths concepts, start asking questions about how much things cost or regularly display a burning desire to buy something.

  • How to give

The big question here is, do you just hand them the money or must they earn it? Many families do both: they provide a basic pocket money amount and the opportunity to earn more. Having earned something not only makes it seem more valuable, but it builds self-worth. Make sure not to allocate rewards to expected behaviour but rather offer to reward efforts that go above and beyond.

  • How much to give

You probably won’t have to pry too hard to be told how much your child’s friends are receiving. Get a good idea of the going rate, then choose an amount based on your family budget and what you would expect them to spend/save each week.

  • How to keep track

Being able to track what they spend and save is important and the more visual the better to begin with. You can move from jars labelled ‘to spend’/‘savings’/’to donate’, to charts, to a ledger, to internet banking.

  • How to teach them to save

Setting a saving goal, like enough for that awesome Lego set, is a good motivator. Once set, agree the minimum deposit each week and find a fun way of displaying their progress. As they grow, the goals will change and saving for a car one day will be second nature.

If your children are older and use devices, there are nifty pocket money apps out there. An example is iAllowance which tracks pocket money, chores and rewards. It’s so good that we’ve moved on from the days where money management was a secret science for adults, and kids simply got change to spend on sweets – enjoy empowering your child with one of life’s most important skills.

Sources:

http://www.huffingtonpost.co.za/2017/04/29/why-giving-your-kids-pocket-money-too-young-is-a-bad-idea_a_22061206/

https://www.moneysmart.gov.au/life-events-and-you/families/teaching-kids-about-money/giving-kids-pocket-money

https://www.sowetanlive.co.za/good-life/2017-03-02-do-you-give-your-child-too-much-pocket-money/

http://www.sheknows.com/parenting/articles/1071903/5-reasons-kids-should-get-pocket-money

http://www.htxt.co.za/2016/09/27/standard-bank-kids-banking-app/

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