Pocket money is the best opportunity for kids to learn about budgeting and money management. You may start introducing pocket money to children as young as 4 years. The amount you give as pocket money depends on the frequency, the family circumstances, and the values.
Best Time to Start Pocket Money
Start introducing pocket money when you think your kids are ready to understand basics about money like:
- Spending all the money means, nothing left for the next time
- It is important to save money
- Prioritizing the things they need to buy
Help children learn simple money management skills. Assist them to choose between saving and spending. Let them save towards a goal, as small as buying the favorite storybook, to cultivate savings habit.
Let them make a few mistakes in the process. Allow them to spend on some unnecessary things. That ok. It’s a part of learning process. But help understand the consequences of losing money.
How Much Pocket Money Does My Child Need?
Take a decision based on
- How much your family budget will allow
- Expenses you expect your child to cover within the allotted money
- Extra chores your child does to earn money
In general, pocket money should cover child’s expenses like:
- Special outings
- Saving for a toy, game, or a book
- Gifts for friends or family
- Snacks at school
If you find your little one is saving responsibly towards a useful dedicated goal, you may consider increasing the amount.
More Pocket Money Tips for Kids to Learn Money Management
Give more tips to kids on wise budgeting of pocket money. Here we listed some of them
- Help kids be clear about expenses to be covered
- Tell them that they will get the pocket money regularly at a set day and can’t ask for more till then
- Let them save in dedicated jars. And as the level grows, appreciate them for being a good saver
All these tips would teach kids about living within their means, which is a crucial money lesson required for any individual to lead a financially disciplined life.
Remember, your child learns a lot from observing you. So, ensure to practice good money spending or saving habits to be a role model to your little darling. Financial literacy should start with you. Do the right things with your money and help your little one follow. Start saving and investing through right channels to make your kid a millionaire in a couple of decades. For more advice on personal finance, approach online fiduciary-like ArthaYantra. We offer holistic services for complete financial planning to secure your family’s future.
