Giving your children pocket money is the first step towards teaching them the value of money: the importance of saving, spending wisely as well as developing healthy financial habits. However, it is not uncommon for parents to make these five mistakes when it comes to the topic of pocket money:
1. Starting too late
Some parents believe that if they start giving young children pocket money too early, it may have a negative impact on their concept of money; some think their young children may end up splurging once they get their hands on it. In fact, when children start getting a modest allowance early in life, it is easier for them to develop proper attitudes towards savings and spending.
2. Not giving a fixed amount
While the actual amount does not really matter and there is no such thing as a standard, parents should discuss with their children and agree on a fixed amount of pocket money based on actual needs. Through this process, children can learn to plan and use their money prudently.
3. Not guiding them how to manage their money
Children should be taught to divide their money into three parts: save, spend and share. They should also be reminded that since the amount of money we have is finite, we cannot have everything that our hearts desire. It is especially important for them to understand the difference between “needs” and “wants” and think twice before making any purchases.
4. Not setting the rules
It is best to set some ground rules on children’s spending. For instance, in the case of overspending, they should understand that there’ll be consequences such as no additional allowance, and they’ll have to wait untill the next month. Children should also be encouraged to keep a record of their daily expenses and spend within budget.
5. Not helping children develop responsible behaviours
Rewarding children with money for good behaviours, such as doing their homework or helping with chores, do not work well in the long run. Children should learn to be responsible and complete their tasks properly even without monetary incentives.
16 October 2019