Giving your child pocket money is a fantastic way to teach them money management skills and independence from an early age.
Giving your child pocket money is a fantastic way to teach them money management skills and independence from an early age. When they’re saving and spending their own money, they can learn to think carefully about their decisions and choices.
Here are some ways to help your children get the most out of their pocket money.
Things to consider in setting up a pocket money system are; how much you give, at what age, if it’s a regular payment and how often and if you want to include a charitable element, to teach the importance of helping others.
Some parenting experts warn against using pocket money as payment for children doing their household chores. They believe chores should be done by children as their contribution to the family, rather than because they are being paid. Other people believe its fine to use pocket money as a reward.
Sit down and discuss pocket money with your child. Make sure you let them come up with their own ideas so they feel a part of the process.
You might want to create some guidelines together. For example; dividing their pocket money into spending, saving and charitable giving, which can help them learn how to budget, or if you want to set restrictions around what they can spend their money on.
You should open a savings account in your child's name, if they don't already have one, so they can watch their savings grow. Children's accounts often offer a high rate of interest and no fees.
Giving out pocket money in coins and notes can make it easy for children to physically split their pocket money into savings, charity and spending money, if that is the plan you have chosen.
Most of the time, it will be easier for you to take their savings money and transfer it to their savings account online. However it is a good idea to sometimes take them into a branch to meet the bank staff and practice depositing and withdrawing money in person.
Give your child some advice on how they can save their money and encourage them to set some savings goals. A good tip is to have a wish list of items to save for.
A savings wish list can also be a useful tool for you, when faced with a child who wants to have something right now. You can explain that the 'must-have' item can go to the top of the list. It may turn out the thing they desperately want when you are out shopping, isn't such a priority a month later when they have enough money to buy it themselves.
Saving up for something special helps children to learn goal setting, budgeting, delayed gratification and gives them personal satisfaction once they achieve their goal.
Do your research and decide what form of pocket money suits your family, your lifestyle and your budget. Whatever you decide, if pocket money is used well it is an excellent tool to teach children about the value of money.
Good money management habits start early. If your children learn these essential skills when they are young, they will be better at managing their money later in their life. Read more about raising money clever kids.
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