Pocket Money

Many parents give their children ‘Pocket Money’ during their school / college years and continue till they start earning on their own. 

Now, some parents interpret pocket money to be nothing more than money to spend for luxury, regardless of the child's age. However, most of them do not see the opportunity to educate and introducing certain values while making use of money.

Some parents pay their kids for helping at home; but does it help the child to get a healthy feeling of  being a member of the family group? Would the child likely then to volunteer to help in many other jobs he is not paid for? Actually, that is a risk that parents would be taking if that becomes a practice.

Here are a few useful tips that could help in using the concept of Pocket Money to  educate and add value to their children's lives…

1.      Take the child into confidence: It is important to make the child learn about the concept of pocket money. Let him/her know the importance of saving and also how to plan the expenditure. By doing this, the child starts learning at an early age that it is not only that one needs to earn money but also needs to spend judiciously so that you save some part of it to get financial stability in your future.

2.      Do not make wrong Habit: Parents can pay the child occasionally as an incentive or gift for doing some unexpected job. By doing this it doesn’t send a message to the child that for every job it does, he/she is entitled to get paid.

3.      Open a bank account in the name of your child: Opening a bank account in the child’s name would help in making him/her learn about banking/interests/planning etc at an early age. Depositing a fixed amount each week or month and withdrawing from the account for expenses would help in keeping a track of funds. In case grandparents or other relatives and friends gift money on certain occasions such as birthdays or festivals etc, that amount could also be deposited in this account. This would help the child learn about fund management.

Many banks have come up with interesting features such as Personalized account number, debit card in the name of the child, the option of creating Passion Fund for the child’s future etc.

4.      Mentor The Child : Let your child receive a certain  fixed amount per week/month, on a particular day. Help him make the decision on how he/she could plan to spend the money. Offer suggestions now and then to make budget under different headings such as transport/food/buying storybook/clothing/Stationery  etc. Encourage the child to come with  new ideas and implement the same if they are worth. Remember! You should not dictate your terms. Assume that it is your child’s money.

5.      Help your child set a bigger goal: It is common to see that kids like to spend money immediately on things such as junk food, buying things that are actually not needed.  You can motivate your child and avoid unnecessary expenses so that the amount saved can be used to buy bigger things that he/she could be excited to have. Such small steps early in life can set a lifelong habit that could make a big difference in the child’s future.

6.      Create Compassion Fund:  We as parents aspire to give our children the best things in life because we love them. At the same time, it is important that we also make our children aware of certain realities that exist around them.

There are many children, people who are underprivileged and are struggling every day to get basic needs such as food, clothes, and education. How about creating a ‘Compassion Fund’ where you put in say 10% of your monthly pocket money and this amount is spent exclusively to support poor and the needy people with food, medicines, education, etc. You could also feed stray animals in your neighborhood. By doing this you are actually contributing towards creating a generation for the future where the children will not only take care of their own family but also the community around them. Wouldn’t that help in creating a better world to live in? I am sure it would.