For little people who don’t earn an income, it’s remarkable how often children have a little money in their pockets. From family gifts to parental allowances and beyond, there are plenty of ways those little guys find to scrounge up some cash every now and then.
I’ve taken some time to identify some of the most common sources of pocket money for kids, and note some considerations that should be made with each one. Just because it doesn’t seem like a lot of money to us, doesn’t mean that kids can’t learn from a very early age how to be responsible with a little pocket money.
Several parents try to teach both responsibility and financial gain lessons by assigning chores to their children. That being said, this can be a slippery slope where kids start to do extra around the house – expecting to be paid for it rather than just thanked! While both chores and some form of an allowance are a good idea individually, it’s best not to combine them directly lest the kids become confused about being paid versus being thanked.
Family, family, and more family
A big source of spending money for kids is the extended family. Aunts, Uncles, and Grandparents are all famous for giving a few dollars here or there. This is fine, and easy to enjoy, just make sure they’re not helping your child afford something you have already said no to, or something they’re trying to save for. Cutting their savings goals short by randomly providing doesn’t necessarily help them learn the importance of saving.
When parents are separated it creates the added complexities that come with a child having two households, and two sets of rules to live by. This can sometimes result in one parent gifting money that the other parent already provided, and the child ending up with too much not knowing what to do about it. Discuss with your partner how much you guys plan to give, and have fun with the kids to show affection rather than buying new gifts and toys to keep them company.
Thinking about how the kids are spending
It is definitely worth it, wherever your children are getting their money from, to sit them down and talk to them about finances. From an early age children often manage to absorb more than we think, so why not help them to absorb some healthy financial saving habits when it seems easy, so that it’ll be easier to do when it gets hard for most of us. These lessons can carry on in value for years to come.
As much as you may want them to save it all, don’t forget it is their money too. Let them decide ultimately where it’s going to go, and if they make a mistake let them! How else will they learn? Just take the time to talk about it afterwards so they can learn how to do better the next time.
Helping kids plan for the future
Talking to kids about money opens the door to hearing their goals and plans for what they would like to save up for. Help them to figure out how much the items in question cost, shop for deals together, and make a plan so that they can save up.
This also goes towards helping them think about times in the future they may need money. If your family is planning on taking a vacation for example, they may well want to save a little bit for a souvenir, so let them know early so they have the chance to save.
Start small, learn big
No matter what you choose to do to help your kids learn, recognise the value of teaching them to handle pocket money responsibly. This sets them up well to be successful when they start handling their first pay, and even when they start dreaming bigger financial dreams.