Giving out pocket money is a great idea and when you do so in the right way, the kids can really learn about the value of money, and how to manage it. Now, giving out pocket money each week for nothing, is not a good precedent to set and you should instead try to help your kids to realize that they have to earn their pocket money, and you should be working hard on ensuring that they manage it in the right way.
If you aren’t sure how to go about pocket money for the kids, here are just a few ways in which you can give it, and manage it.
The first step is to ensure that your kids understand that they have to put in some effort to earn the pocket money in the first place. The way in which I do this is to draw up a chores list each week with different values attached to each chore. I have two kids so it works really well, on a Monday, my children elect which chores they will do and at the ned of the week I’ll give the money for completed chores. This helps to get housework done, and helps the kids to learn.
I like to encourage my kids to save and so I decided that for whatever they could save up in a 3 month period, I would add a further 50%. Now, this may not happen in real life but it does help the kids to learn. My kids really impressed me with this and managed to save a great deal of money.
I let my kids spend whatever they want and I always like to wait a couple of days after their purchase, and then review it with them. We all know that kids don’t really think their spending through, but I didn’t want to stifle them, instead I wanted them to learn from their mistakes. A couple of days is enough for them to realize that they wasted their money, and that is when you can offer them some crucial advice.
I like to operate a bonus system with my kid’s pocket money to inspire them to study hard, be kind and respect others. I like an incentive system and my kids respond really well to this way of rewarding them.
Whenever my kids want to make a large purchase, they must speak to me or their father first. We set a limit of $20, anything over that and we will talk through the purchase with our kids. The idea is not to tell them no, it’s to help them understand the thought process which they must go through before they decide to spend big money. I really believe that this will help them to be smarter with their money when they start to work and manage their own finances.
How do you like to manage the pocket money of your kids? Let us know in the comments.