Pocket money is your chance to teach your children how to handle their own money. But like all facets of parenting, it’s not entirely plain sailing. René Roux, mother of two and head of Sanlam Liquid, offers some guidance about the dos and don’ts of pocket money, and sisters Saskia, eight, and Nina Nel, 11, give us the insider scoop on how pocket money works for them.
Children grow up so fast and before you know it, they are asking for pocket money. This has its upside because pocket money is an important teaching tool as this is their first introduction to the world of money. Instil good financial habits from the word go and these will stick with them through life.
Don’t give them too much pocket money
Determine what you would like their pocket money to cover. Work out on average what their recreational activities cost and what their daily spend is, include a small portion that they could save and keep in mind that you might have to pay them for extra chores done, and then decide on a suitable amount. Don’t give them too much as this will allow them to spend frivolously and buy unnecessary items, and will eliminate the need to do extra chores for additional pocket money. How much pocket money do they get? Saskia says, “R10 a week.” Nina says, “I get R25 a week. Some of my friends get R100 a week but they have to buy their own clothes and pay for their own entertainment, like if they go to movies.”
Do teach them how to budget
Point out clearly what their pocket money should cover. Encourage them to work out how much to spend each day to ensure their pocket money lasts the whole week. Introduce the wonder of saving up for something. Give them a tangible goal to save up for and put their savings in a transparent money box so they can see their money growing.
How do you spend your pocket money? Saskia says, “I save most of my pocket money so I can buy something I really want. I am saving to buy a YooHoo toy, which is about R50.”
Nina says, “I also save some of my pocket money until there is something I really want to buy, and spend about R15 a week on tuckshop. My mom and dad pay for my clothes, entertainment and other expenses. My mom saves my money for me but next month I am going to open my own bank account.”
Don’t give them extra pocket money
It is important to agree on an amount and stick to the set amount, give no more and no less. If they spend all their money in one day and don’t have anything left for the rest of the week, they must understand the consequences. This lesson will prepare them for the real world and show them if they budget incorrectly and overspend they cannot ask for more money. What happens if you spend all your money? Saskia says, “If I spend all my money my mom and dad won’t give me any more.” Nina says, “Sometimes I spend all my money at tuckshop because the prices are so high and then I have to go without and wait until Friday to receive my pocket money.”
Do incentivise for extra money
Compile a list of additional chores that can be done for extra pocket money, such as washing the dog or watering the flowerbeds, and assign a monetary amount to each one. This must be separate from their compulsory everyday chores such as making the bed, tidying their room, or setting the dinner table. If they need to earn extra money because they have overspent or they want to buy something special they can select the most appropriate chore from the list. This teaches them that hard work gets rewarded and that there is always a way to earn extra cash by taking on additional tasks.
What chores earn you extra pocket money? Saskia says, “If I need more money my mom says I can water the plants or wash the dog, Caramel. But I don’t like washing Caramel because he just goes and rolls in the mud afterwards.”
“We get an extra R5 for every test we get 100 per cent for,” adds Nina.
Be disciplined when allocating pocket money to your kids, make money matters fun and exciting for them and inspire them to be financially savvy by managing your own finances responsibly.