When our children start school, they are often given pocket money to help them buy the items they need, such as lunch or a snack. While pocket money can be a great way to help children learn financial responsibility, it’s important to make sure they know how to handle their pocket money properly.
Teaching children how to manage their pocket money correctly can help prevent them from getting into debt and develop positive financial habits that will serve them well in their adult lives.
In this blog post, we will discuss the importance of teaching your child to handle their school pocket money and offer some tips on how to do so. We will explore the benefits of teaching your child how to save, budget, and manage their own money, as well as some of the pitfalls to avoid.
With the right guidance and support, your child can learn to be financially responsible and make smart decisions about their money.
1. Encourage your child to set a budget
Before your child starts using their pocket money, it is important to encourage them to plan out a budget that they can stick to.
This will help them to make responsible decisions when it comes to spending and will also help them to understand the importance of budgeting.
Start by helping them to identify their essential spendings such as lunch and school supplies.
Then, they can identify non-essential spendings such as snacks and treats. Encourage your child to plan out a weekly budget that takes into account all of their spending needs.
This will help them to stay within a reasonable budget and to make smart decisions when it comes to their money.
2. Explain the importance of saving
It is important to teach your child the importance of saving their pocket money. Saving money helps them plan and prepare for future purchases and can teach them the value of delayed gratification.
You can explain that saving money over time can help them purchase larger items that may not be affordable in one purchase.
This will teach them to budget and delay purchases until they have enough money to pay for them all at once.
Additionally, you can help them open a savings account and deposit money regularly, so they can watch their money grow over time.
3. Allow your child to make mistakes and learn from them
One of the most valuable lessons you can teach your child when it comes to handling their school pocket money is to allow them to make mistakes and learn from them.
Giving them the freedom to make their own financial decisions, even if they are wrong, is key to developing their financial literacy.
This process will help them learn how to manage their finances in a responsible and mature way, and equip them with the skills to make more informed and appropriate decisions in the future.
4. Teach your child to be mindful of their spending
Teaching your child to be mindful of their spending is a key component of teaching them how to handle their school pocket money. You can do this by introducing them to the concept of budgeting.
Encourage them to think about their wants and needs before making a purchase, and to consider how much money they have available, whether they have enough to buy what they want, or if they should save it for something else.
Explain to them the importance of making informed financial decisions, and the consequences of not doing so.
Give them a visual representation of their purchases by providing them with a budget sheet. This will show them how much money has been spent, and how much is left.
5. Help your child understand the concept of delayed gratification
Learning how to delay gratification is an important life skill for children to develop. With the right guidance, children can learn how to prioritise and practice delayed gratification in their everyday lives.
Here are a few tips to help your child understand the concept of delayed gratification:
- Model the behaviour. Show your children that you are willing to make sacrifices and wait for a greater reward.
- Explain why. Talk to your children about why it’s important to wait for a reward. Discuss the benefits of delayed gratification, such as having the opportunity to save money for something bigger and better.
- Set expectations. Set expectations for your child in terms of how long they need to wait before they can get what they want.
- Make it fun. Make delaying gratification an enjoyable experience. You can use games or activities to help your child understand what delayed gratification is.
- Help your child understand the concept of delayed gratification. Discuss with your child how they can control their impulse to buy something right away and instead wait for a larger reward.
- Model good financial habits
Modelling good financial habits is an important element in teaching children how to handle their pocket money. It is essential to demonstrate to your children how to properly manage their finances, as this will set them up for success later in life.
Show your child how to save money by setting aside a portion of their pocket money each week and discussing the importance of budgeting and tracking their expenses.
Encourage them to make wise financial decisions, such as avoiding borrowing money and unnecessary impulse purchases. These positive habits will help your child to become financially secure and independent.
7. Offer guidance and support when needed
One of the most important roles that parents can play in helping their child handle their school pocket money is to offer guidance and support when needed.
While children should be encouraged to be independent and make their own decisions, it is important for adults to be available to provide advice and assistance when needed.
Parents should help their children set realistic goals and budget appropriately, as well as help them navigate any difficult situations that may arise.
By providing guidance and support, you can help your child develop healthy habits and money-management skills for the future.
8. Create a system of rewards to incentivise good behaviour
One of the most effective ways to teach your child about how to manage their money is to create a system of rewards for good behaviour. A rewards system should include incentivising good behaviour when it comes to school pocket money.
For example, you could offer additional pocket money for completing homework on time or for getting good grades. This will help your child understand the value of hard work and encourage them to stay on track with their school work.
In conclusion, teaching your child how to handle their school pocket money is a valuable skill that will benefit them in the future.
It will help them develop important financial literacy skills, as well as teach them how to be responsible and disciplined with their money.
Additionally, it can help them learn how to save, budget wisely, and make smart decisions when it comes to spending. With a little guidance and patience, your child can become a savvy pocket money manager in no time.
Also read: Indulgent Parenting Style: Definition, Characteristics, Drawbacks and Benefits
