Parents Guide - Teaching Your Children to Manage Their Pocket Money and Allowances5051605

I was encouraged from the age of 5 to save my money and my parents took me weekly to the local bank so that I could pay part of my pocket money into my passbook account. This set me up for life. The habits I learned as a very young girl are still with me today and the wealth I have amassed during my life is a direct result of being taught to respect money.

This guide will help you to understand about paying your children pocket money / allowances. It steps through many things that you should consider to help your children to manage their money from an early age.

Don't make pocket money something that is taken for granted. Ideally get your child to do something for it so that they earn it. Set a chores list and include such things as washing dishes, tidying their room, putting away their toys etc. If they do these things then they can get paid their pocket money. If they don't then they don't get any pocket money. Work out what you consider to be a fair amount of money to give your child as pocket money. This will depend of what you expect your child to do with this money. If you expect them to budget and buy their clothes, pay for all outings etc from their money, then you will obviously need to give the child more. Ensure your child understands what their pocket money is for and what it needs to cover. If they have to buy clothes, outings, entertainment etc from their money, they must know this. Stick to your plans of what the pocket money is for. You must not give your child large sums of money with the expectation that they then pay for lots of things, if you let your game down and buy them clothes or keep giving them extra money for outings and entertainment. When you give them their pocket money, insist that they put some of it aside into a savings account. Help them to do this - so this means you need to take them to their bank / building society each week and help them to fill out the deposit slip and pay their money into their account. Keep your children motivated by showing them the balance as it grows Work out a set amount or a certain percentage of their money that gets put into their savings account and stick to this amount each week. Help them to budget their pocket money so that they have money for the little things they want to buy each week, but also try and work it so that they have some spare money over each week. Encourage your children to put their spare money into their piggy bank so they don't spend all of their pocket money all at once. They can use their piggy bank as short term savings for things that they want to buy. They can use their savings account for long term savings. Help them to understand the value of saving money. Let them work out what bigger items they want and help them to see how long it will take them to save the money. Teach them the more they save now the sooner they will have their item. Encourage your children to save long term for things such as cars and houses that they will need one day in the future. Keep explaining to them about money and how the savings habits they form now will set them up for the future. Reward them when they do reach their savings goals and have purchased that something special. Maybe give them an extra bit of money as a gift to congratulate them on their disciplines and success. Don't encourage your children to borrow money off you under a loan or payment in advance scheme. This is just teaching them bad money habits and getting them used to the world of buy it now and pay for it later. Teach your children to respect money so they don't feel it grows on trees. If you educate them how to handle money correctly from an early age you will be setting them up for life. They will understand that money is hard to earn and that will encourage them to spend it wisely. money