The sooner kids are familiar with coins and notes, the quicker they will appreciate the value of money, and this can be hugely important in later life. Research suggests that a child’s money habits are largely formed by the age of seven.
Once kids understand what money is, and have seen how you use it, pocket money is a great way to get them to understand what money is used for – whatever their age. Giving them the opportunity to spend their own money helps them decide when they spend it, how they spend it, and whether they want to save it. Mistakes will be made – no doubt about. Yet they will learn from those errors.
As your kids begin spending their money themselves, encourage them to think about how:
- They might be able to save for more expensive items instead of more immediate treats; how the same value
- They are likely to obtain the same functionalities from a non branded gadget or good as much as branded ones, for a fraction of the price, and thus allowing them to make their money do more for them then it would otherwise be the case.
Sit down with your kids, and help them to work out how much need to put away and for how long to reach their goal amount. Then you can pick out a money box or open a savings account for them.
Make sure they are with you when you save the money in their account, underlining that the money is theirs and they see the return of their efforts as their savings grow over time.
As your children get older, you may wish to give them more money, but also get them to pay for some of the things they enjoy doing and some of the things that essentials. This will help them to learn the value of money – that the good things do not come for free, but are attained by budgeting for them. Start transitioning them from a weekly pocket money to a monthly one to help them get used budget, set goals, prioritise, and make money last for longer. It will also help them to begin to realise there are essentials, needs, they cannot go without, even if there are more fun, wants. options.
You can also show your children that money does not come from nothing by paying them extra money if they complete tasks or chores around the house. And as they move into part-time work, and begin to have more cash available to them, you can encourage them to put that money towards new expenses such as driving lessons. You can also motivate them to set life changing goals, such as for example continuing to study, by agree with them that for every €1 they save to reach this goal you will match or partially match it.