30 Jan The Gift of Pocket Money
Can’t wait for school to start? The final countdown begins! In the midst of organising uniforms and stationery etc, have you considered perhaps that this would be a good year to start giving your child pocket money?
My parents started giving me pocket money when I was in Year 1. $2 a day – a dollar to be used and a dollar to be saved. Here are 3 reasons why you should consider giving your child pocket money:
1. You are developing their ability to make mindful choices
Pocket money allows your child to practise making choices in a safe environment – “Should I spend or save?”, “What should I spend this money on?” Have conversations on what they do with the money, and enable them to build healthy perspectives/ habits around money. This develops their skills in making intentional choices and prepare them for the future where they have to make decisions with bigger amounts of money. When they are ready, teach them more specific skills like budgeting.
2. You are communicating the value of money
Do you get frustrated when your child loses things and still respond flippantly? Kerri Falconer says it best in this article:
I usually explain loudly that I work hard to earn money, that it does not grow on trees, that I am not buying any more toys, ever, that there are children overseas who don’t even have toys and why the heck can’t they be more careful?
With pocket money, let your child know that he/she will have to contribute towards certain possessions of theirs. Apart from training them to pay attention to their own belongings, this will also enable them to understand that their actions have impact and train them to bear the natural consequences of their actions.
3. You are investing into their future
Go beyond just giving your child pocket money. Convert a jar into a saving container, get a traditional piggy bank or even open a bank account for your child! Encourage your child to set aside part of their pocket money as savings. Cultivate their habit and build their wealth when they are young. After all, the younger they start savings, the more compounded interest they earn on their money! Read here for more tips on important attitudes to have on savings.