We give our children everything. Do we really need to top that up with a little bit of extra cash every week or month? Perhaps. Don’t underestimate the importance of pocket money. Sure, it buys a regular stream of toys, video games and confectionery, but it also prepares children for the future, by equipping them with vital life skills. Here’s a little more about pocket money, and a few ways in which it works.
Good financial habits start early
Managing a salary, mortgage payments, and juggling credit cards all seem like mature, adult skills, yet recent academic research suggests that these abilities take root much earlier in life. According to the Money Advice Service’s 2013 study Habit Formation and Learning in Young Children’– authored by behaviour experts at Cambridge University– many of us will have formed our basic money habits by the age of seven. The study found that kids amass a bank of knowledge about the causes and effects of what they perceive around them within the first four to five years of their lives. Much of that information comes from their interaction with their parents and their home environment. Want to influence and shape that learning process? Pocket money can be a great tool to key into that early learning.
Rewarding good behaviour is more effective than punishing bad
It’s a widely acknowledged truth that you can change a child’s behaviour more effectively by rewarding good actions, rather than punishing bad ones. Unfortunately, we don’t have many easy rewards available to us. However, pocket money for children is one of the few modern mechanisms we can draw on, to show we truly admire our kids when they share their toys (and that we aren’t so keen on those bedtime tantrums.)
You could even go a bit further, by paying kids for chores. Find out more about a pocket money chore list here; and read through how much parents pay out for certain tasks (as well as much more besides) in our latest Pocket Money Index.
Real life maths
Pocket money shows children that adding , subtracting, multiplying and dividing aren ‘t just useful skills in the classroom; they’re vital abilities when it comes to the wider world. Young children will be able to work out how many weeks of savings it will take to buy a new Lego set or video game, while older kids should be able to master tougher challenges, such as the calculation of compound interest. In every case, they will soon realise that their childlike wants need to be backed-up with some rather grown-up mathematics, if they want to truly realise their desires.
Learning by making mistakes
The stuff you want to buy your children won’t be the same as the things they want to buy themselves. The world’s landfill sites are filled with old, unwanted loom-band kits and fidget spinners. This isn’t terrible news. Everyone learns by making mistakes, and pocket money ensures those mistakes start off on a manageable scale. Your son or daughter might be unwilling to save up for a new bike or a phone handset, when there are so many impulse buys on offer. However, a few wasted purchases will soon teach them the value of savvy saving and spending, and that knowledge may well stay with them for years to come and help them make more considered spending choices.
It can actually make them a little bit selfless
Many young parents worry that, by giving their son or daughter a regular amount of money to spend, they’re stoking unhealthy desires for Star Wars Battlefront loot boxes and Robux. This fear is as old as pocket money itself.
Sidonie Gruenbergm, the Austrian-born, US-based parenting expert who popularised the concept of giving an allowance back in 1912, also campaigned against what she saw as “arbitrary puritanism”, or the view, held back then by strict parents, that every desire and impulse was inherently bad.
The truth is that a regular pocket-money allowance can also encourage charitable giving. Ask your kids which charities they would like to help out, and discover their untapped enthusiasm for everything from environmentalism to animal welfare.
Understanding a cashless society
Once parents could empty the cash from their purses and wallets onto their night stands, and have enough change to pay for their kids’ pocket-money allowance. These days few of us touch a note or a coin from one week to the next. What’s more, kids see fewer real-cash transactions taking place in front of them, which means they’ve really got to take matters into their own hands, if they want to truly understand our cashless society. Of course, once you’ve chosen to give pocket money, there are plenty of further questions to ask, such as how much pocket money you should give?; how should you tie it to chores or good behaviour?; what are the best pocket-money apps for kids? or how can you encourage children to make smart choices with the money they’re given? Don’t worry, we’re here to help. Find out more about RoosterMoney here.