Pocket money can often be a big issue with kids. They will want it; they will know how much their friends get and will put pressure on you to give it to them. Some parents do not give any, some make their children save it, some make them save some, some make them earn it. What is the right thing to do?
Make Them Earn It
Many parents feel that it is right to make their children earn their pocket money. They will give them chores to do and they can only get their pocket money if they complete them. Others might choose to pay them for doing certain jobs, so a certain amount for clearing the table; a different amount for unstacking the dishwasher etc. Essentially, they are similar in that you are paying them to do jobs around the house. There are advantages and disadvantages to doing this. If they have to work for money this teaches them a life lesson, that if they want to be paid, they will have to work for it. They will therefore be used to that idea when they have to set up on their own and they will know that in order to pay the bills they will need to earn the money to do so.
However, there is a flip side to this. It means that they might not help out in the house unless they are paid for it. So, if you are unwell, for example and want a bit of help with the chores you would normally do, they may not do them for you unless you offer to pay them. When they get to living in their own home, they may not want to do the chores because they are not being paid to do them and it might make them really hate doing it. It is a tricky decision to make really.
Give it to Them Regardless
If you just give them pocket money without them having to do anything for it, they might just expect to get money for nothing whenever they ask for it. However, it can help them to start understanding about saving and budgeting. Having a bit of money to spend or save, means that they have decisions to make. They will be able to afford to buy things but they will need to decide whether they want those things or to save up for more expensive things or to save up for the future. It is good to have to make these decisions and they will help them for when they are older and these decisions are really important.
Save Some / Spend Some
Some parents ask their children to save a percentage of the money they are given and allow them to spend the rest. This means that they will get into the habit of saving at least some money. This can be useful because it means that they will think about all money that they get, whether now as a child or as an adult and consider saving at least some of it. They may get annoyed with this method though if they want to buy something expensive and they cannot because they have to save some of their money. It could be that you might want to negotiate with them at times, if they want to buy something expensive, so that they can get some things if they want to.
Some parents might want to encourage their children to save all of the money that they are given so that they can use it when they have important things to buy such as cars and houses. This might sound sensible but it could mean that they do not learn valuable lessons. Allowing children to spend some money, means that they will go through the process of choosing things and buying them and then using them. It could be that they will regret buying certain items because they are not as good as they thought they would be. This could lead to them thinking harder about spending decisions they make in the future and could save them from making a big mistake when they are buying something really expensive.
Some parents encourage children to spend all of the money that they are given. This means that they get used to making decisions in shops and understanding prices and things like that. However, it does not teach them about saving up their money and could mean that when they get paid, they will think that they have to spend all of the money they earn.
There will be parents that give no pocket money. It could be because they cannot afford it or because they do not think it is necessary. It means kids will not learn about spending and saving but they could be taught about the principles even without having the money themselves.