The upcoming Hanukkah holiday raises economic and educational questions for many families regarding Hanukkah gelt and pocket money in general.

The dilemma always includes thoughts about the benefit of giving pocket money – whether the child will benefit from education or whether the pocket money will be used to buy things he or she doesn’t need. Will the children know how to manage money and how we as parents can help them learn how to spend their money wisely?
Giving pocket money involves a lot of thought as well as conducting a dialogue with the children, determining family rules about what the money is spent on and what is not, building a weekly routine of giving pocket money and giving the children independence to make their own decisions.
Paamonim recommends regularly giving children pocket money – money that will allow them to experiment according to age in money management and decision making. The benefits that the children will derive are many, and Hanukkah is an excellent opportunity to rethink the issue of pocket money, and to consider the benefits inherent in them.

10 Things Your Kids Will Learn If You Give Them Pocket Money Regularly

1. Independence – A small amount of money available to children to use as they see fit (within the boundaries defined in advance by the parents, of course) allows them a sense of independence, control and maturity. On the one hand, we may hear expressions such as “this is my money and I can do whatever I want with it” and we will have to deal with them according to the limits we have defined, on the other hand, along with independence comes responsibility, and these feelings can also positively affect the children’s conduct in many areas – at home and at school.
2. Value of money – When children immediately ask for and receive money from their parents to purchase a candy or toy, they do not really understand the value of the money they received. Children who receive pocket money begin to gain a new understanding of its value, think twice before spending it and take into account consideration such as the price of the product they want to buy in relation to the amount of pocket money they received.
3. Budget management – money spent disappears tangibly from the child’s wallet or coffers and cannot be used to purchase other things. Pocket money enables direct learning of the concept of the budget and its limitations. Naturally, pocket money will cause the children to think about their priorities and understand the principle of conduct within a limited budgetary framework.
4. Learning a little math and consumer concepts – how much things cost, what is considered cheap and what is expensive, what is a worthwhile purchase, is it possible that the more expensive product is actually profitable (contains more quantity, will last for a long time, etc.), and of course math calculations such as addition, subtraction, multiplication and division.
5. Postponement of gratification and priorities – It is likely that in the first few weeks the children will spend their pocket money on the day they receive it and purchase the first thing they see. Slowly, and with your parental guidance, insights will begin to trickle down on the ability to postpone immediate gratification in order to get more money and buy a more expensive and “worthwhile” product/pastime.
6. The importance of saving for the future – When children receive pocket money, they can be directed to set aside some of the money they received. The pocket money directed to savings accumulates and becomes a significant sum that allows the children to fulfill bigger dreams. Experiencing savings is an invaluable tool for your children’s learning and shaping future economic perceptions – planning ahead, saving for future goals and relying solely on existing money.
7. Financial planning – discounts and promotions – When children realize that they have money that belongs to them and can spend it as they see fit, they begin to look for ways to maximize their financial ability and get a higher added value for the money. Now comes your chance to teach them how and where to find discounts and lucrative deals that will enable them to achieve more, read the fine print and compare offers.
8. Repayment of debts – In every family where it is customary to give pocket money, the phenomenon of applying for a loan is recognized. Children run out of money before receiving the new allowance or they want to buy something big, at a limited time opportunity, and ask you for a loan at the expense of the next pocket money. In principle, the children should not be given pocket money untimely so that they can learn to use the pocket money they received wisely and save for a future goal. However, there are cases where the children want to purchase something big and there is a reason to purchase it at a certain time (for example, a birthday) If you decide to allow the children such a loan – you have a great opportunity to teach the children a very important principle: borrowers must pay their debts.
9. Price comparison – under your guidance, your children will get used to checking the price of the product they want in several stores. This will allow them to purchase it at the cheapest and most affordable price for them. The price comparison process is an important skill that will serve them in any field.
10. Money aside for a rainy day – children who have managed to save some of their pocket money will be able to get out of unpleasant situations more easily than children who do not have such means, for example – purchase a bus ticket or even pay for a taxi if they are stuck with a friend who lives far away and you cannot help get them back. Such an experience, even a one-time one, will teach them an important and memorable lesson about the importance of saving for a rainy day.

Pocket money is fertile ground for financial education and building healthy foundations for your children’s future financial behavior. Read here how much is recommended to give at any age and how to do it correctly.