How To Give Kids Pocket Money

One of the earmarks that a child is growing up is their request to have money of their own. This desire has proven their ability to understand economy and trade and gives them a new independence and autonomy. However, parents need to use this learning period wisely and not bend over backwards to monetary demands that will not serve as teaching tools for life.

For parents who wish to initiate a pocket money program, be sure the monetary gift is age appropriate for each child. Older children in the teenage years have greater privileges and responsibilities than a younger child and should therefore be rewarded accordingly. A younger child of five does need the education of learning the value for money, but is far less cognitive of the use of currency. Start the younger children with just a few dollars a month and teach them to pay a cashier and expect some change back. Their mathematical skills are not up to par for price calculation, but the understanding of tit for tat will be engrained.

In addition to weekly or monthly spending sprees, the child who receives an allowance has the opportunity to learn to save. As the child grows older, the price of his or her wares will increase from a candy bar to a technical device. Early understanding that there are no free lunches in life will give the child perspective of the real world and what it takes to earn a living. Though the temptation may be great for a parent to kick in the monetary difference, use restraint and let the child save the full amount necessary for their desired purchase. In the long run, the lesson outweighs the merchandise and allows the child to plan ahead and reach their financial goals.

In order to help the child save and spend wisely, be sure to talk to your kids about their goals and assist them with a path to get there. All too often a child sees only the emergent need and does not foresee the long-term picture of what money will be needed the rest of the year. If you are planning a summer family getaway, this is a great way for the child to stash away the cash for a higher purpose during the holiday.

In addition to saving money for the child's own wants, it’s important to teach charity and the notion to save money to buy gifts for others. Whether it is Christmas, upcoming birthdays or an anniversary, no age is too young for the money holder to learn to spend their cash on others. It need not be the entire amount saved, but rather the thought is what's important, even to invest in a greeting card.