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Giving your children pocket money is the first step towards teaching them the value of money, the importance of saving, spending wisely as well as developing healthy financial habits. However, it is not uncommon for parents to make these five mistakes when it comes to the subject of pocket money:

1. Starting too late

Some parents believe that if they start giving young children pocket money too early, it may have a negative impact on their value towards money ; some think children don’t yet need money as everything’s already paid for, and they may end up splurging once they get their hands on it. In fact, the earlier children start getting a modest allowance, the easier it is for them to develop proper attitude towards savings and spending.

2. No fixed amount set

While the actual amount does not really matter and there is no such thing as a standard, parents should discuss with their children and agree on a fixed amount of pocket money based on actual needs. Through this process, children can learn to plan and use their money prudently.

3. No advice given

Children should be taught to divide their money into three parts: save, spend and share. They should also be reminded that since the amount of money we have is infinite, we cannot have everything our hearts desire. It is especially important for them to understand the difference between “needs” and “wants” and think twice before making any purchases.

4. No rules set

It is best to set some ground rules on children’s spending, for instance, in the case of overspending, they should understand that there’ll be no extra allowance, and they’ll have to wait untill the next month. Children should also be encouraged to keep a record of their daily expenses and spend within budget.

5. Creating a linkage between money and responsibilities

In the long run, rewarding children with money for good behaviours, such as doing their homework or helping with chores, do not work well. Instead, parents can help children understand their responsibilities as a family member.

 

16 Oct 2019