In many homes, it is customary to give children pocket money. In other homes, this is not considered important. In fact, our children do not share the family’s income, and the allowance is not intended to share the expenses with them, so is it even worthwhile to give the children pocket money and why?
Giving pocket money is an educational act and helps our children learn to cope successfully with financial challenges.
Pocket money creates an excellent opportunity to teach our children about family values when it comes to the use of money – it is an opportunity to check with the children whether money is a means or an end. Is the purpose of pocket money “spending” or an opportunity to save for big things? Does available money encourage spending? Pocket money is given to the child in order to give him a sense of independence in managing money, but true independence is always accompanied by responsibility: we want to make sure that the money is not wasted on things that we as a family forbid and that pocket money does not lead to, God forbid, exploitation of the child by those stronger than him. The responsibility applies to those things on which the child chooses to spend the money and also to the nature of his conduct with money in general.
Pocket money is a tool that allows children to experience freedom of decision and independence and an opportunity for parents to practice “letting go” of control. Everything is conducted within the limits set for the use of pocket money – when the children are small, it is a small amount of money, and as they grow, the financial challenge increases.
Children who receive pocket money can practice budget management, delayed gratification, future planning, prioritization, and giving up, with parents as their coaches for responsible financial management.
How do you give pocket money and how much?
- Defining the pocket allowance framework – each age has its own unique needs. And like the well-known saying about children and troubles, so do the sums. When providing pocket money, it is necessary to define in cooperation with the children their height and the frequency with which they are given. Preschoolers can be given a few shekels a week and as the child grows the amount can be increased. High school students can manage a large part of the expenses on their own, and the scope of use expected of them can be expanded. Gradual growth in the size and use of the amount of money managed will allow the child to reach a state of managing his money independently as an adult.
- What to do with pocket money and what not – define what you expect the children to do with the money they received, what can be bought with pocket money and what cannot. Every family is different in its conduct and principles, so it is important to jointly define expectations with the children and prevent in advance common claims such as “this is my money and I will buy whatever I want with it.”
- Need and want – pocket money is a great way to learn priorities in spending. There are things we need to buy and there are things we want to buy. Defining “should” and “want” at an early age will help the child in adulthood notice and prioritize his expenses. You can define the uses that the child “should” make of the money, such as buying a friend’s birthday gift and the things the child “wants” to purchase: online shopping, candy, games, entertainment, etc. Encourage your child to think about how he chooses to spend his money. Check with them to see if they tend to spend on “nonsense” or if discretion is exercised before purchasing.
The child can be taught to allocate half of the pocket money to savings, 40% to purchase what he needs or wants, and 10% to donate to the cause he chooses.
- Wise consumerism – pocket money is an opportunity to provide tools for making informed purchases: price comparison, discourse on brands and real worth, analysis of sales promotions and understanding the consumer meaning behind the advertisements.
- Money management – pocket money is a budget that must be managed: it is necessary to plan the use of pocket money, to know how much there is, what the money was spent on and how much is left. Each child according to his age.
- Earning more than pocket money – getting pocket money is nice, earning more with effort is even more fun. Do you want to encourage your child to save? Encourage him to work, and offer to double the amount he earns for a meaningful cause.
- Check at every stage what your goal is in this matter, and whether you have advanced your children and given them tools for coping with the reality in which they will live their lives as adults.
What do you do when there are malfunctions?
- The weekly/monthly pocket money is over and the child needs money? The guiding principle is that if the child has spent all the money, he can receive the next allowance only on the next fixed date for giving pocket money. Providing a down payment on pocket money will teach your child to live beyond what he has.
- The child spent money on something and is he sorry about it? You gave the child pocket money and he ran to buy the first game that caught his eye. Explain to him that the money we received as a gift is also suitable for pampering and fun, but encourage him to check in the future what else can be done with the money and make a list in advance. For example: how much of the money will be invested in shopping and how much is worth saving for a larger purchase, which game will give good value for money, etc.
- The child tries to save for something bigger and fails at the task because he spent all the pocket money? Teach the child to allocate the money he planned to save first and separate it from the rest of the pocket money, so that he will always have enough money to save.
- The child is interested in buying something big that is acceptable to you and you decided to help him by lending him the necessary amount? Teach him that loans must be repaid and explain to him the rules for repaying the loan you gave him, insist on the exact return of the amount at the time you agreed.
- Want to encourage your children to save? Give them increased pocket money in the weeks they managed to save the pocket money or a significant portion of it.
And what should not be done?
- Don’t use pocket money as punishment. The child saved, this is his money. Punishment by denying pocket money or taking what you have already given sends a problematic message and is sinful to the purpose for which you have instituted this habit.
- Have you established principles for the use of money? Don’t deviate from the principles you’ve defined. If you suddenly don’t allow them to buy something with their own money, you’ll make children question the values and principles of money management.
- Accept the difference between different children – Even though all children grow up in one home, don’t be surprised that your children behave differently from each other. Just as adults have different approaches to money, so do children. Some children will look for every opportunity to work and save money, and some will be less interested in money and spend on a whim.
- You don’t always have money either. Didn’t we make sure to provide pocket money on time? The children will soon learn to remind us that we forgot to give our pocket money and will know how to calculate our debts to them very well. Apart from the inconvenience this creates, especially in a month that is particularly difficult for us financially, there is joy in this: the children learn to stand up for their rights and demand what they deserve. An ability that will help them a lot in life.
