It’s so easy for proud parents, grandparents or godparents to put money away for the youngsters’ future needs such as schooling. This practice is fine, provided the kids are taught to save separately and build up their own money skills along the way.
Using a pocket money system is a great idea to start the process of teaching children money management. The amount given is a personal thing. Some people give $1 for every year of age. So a five year old would get $5 and a ten year old would get $10. Whatever the amount is depends entirely on budget restrictions and your personal situation. However, the key is regularity.
Tying pocket money to jobs around the house is a controversial topic. Some parents feel children should “earn” their pocket money, giving them an early grounding in work ethic. Others feel the linking of pocket money to performing jobs is a mistake and can devalue the money skills children might otherwise learn. They argue that kids may not do their allotted jobs around the house if they only have to give up a small amount of pocket money and that jobs should be a family responsibility not associated with money.
To keep both camps happy, perhaps a base amount of pocket money can be paid with your child having the ability to earn more by doing regular jobs for the week.
Don’t be afraid that the child won’t spend the money wisely. Making mistakes is an important part of education, as you can learn from them. It’s better to make mistakes now when they are young rather than later in life – and that’s what pocket money is for.