When is the right time to give your child pocket money?
My eldest has just turned 3 and his interest in money is becoming increasingly apparent! My husband has a ‘change bowl’ by the side of the bed and recently we have noticed the levels of money in the bowl going down. My little boy it appears has been taking money out of the bowl and placing it in a little ‘money bag’ in his room! I have since taken out the ‘gold’ and left the silver and coppers, but it has started me thinking when is the best time to start giving your child pocket money? Having done a little research, it appears that around the ages of 7 to 8 years old Mums and Dads start to give their children a weekly amount, although I have also read a number of parents giving their children money at the age of 3 and 4 like my little one. I recently read a book called ‘The Midas Touch’ by Robert Kiyosaki and Donald Trump and the main point I took away from it was that while growing up very few of us are truely financially educated. We go to school where we learn core subjects and skills such as Maths, English, Science and Languages but we are not given any formal financial education – how to invest, how to save, impacts of inflation and interest rates, how to be an entrepreneur, stocks and shares…I realise therefore the importance of teaching my children everything I can about money. Even at 3 my son is certainly able to understand the concept that money can buy you things and without money you can not have the toy, treat or trip to the zoo. The next and more complex step though is learning the concept of saving and that once the money is gone you have to wait until you have earnt more to buy anything else. Perhaps 3 is too young to learn these concepts, but I had thought about setting up 2 clear jars, 1 for treats and 1 for savings. Each week he could put half his money in each and by the end of the month see how much he had saved to get the ‘bigger’ toy. Now for a 3 year old I’m not thinking about large sums of money but a token amount to start to teach him the value of it. However, what also became apparent from the research I did was that according to a recent study by the ‘Royal Economic Society’ children who are given pocket money rather than made to earn it were far more likely to spend it all at once and also save less later in adult life, compared to those who earned their money through a paper round or household chores. I think it is important though for your child to understand jobs and tasks that they are expected to do such as clean their teeth and clear away their toys versus jobs they can do to earn their pocket money such as put away the laundry, help wash the car and do the dusting. Now even at 3 my son loves to help so I don’t think there is any harm in teaching him the value of doing a job for some money. It will certainly be far better than watching the change bowl go down for free!