Teaching children to budget through pocket money

Pocket money can be a great learning tool for children. Children can learn how to budget from a young age by using pocket money to pay for certain items. Parents should give their children a certain weekly or monthly allowance that they can use to purchase items that they need. It should be a set amount and the child will have to keep a record of his/her spending for that time period.

These children will learn how to keep track of their spending and unlike children who are given a credit card which is linked to his/her parent’s account, children who receive pocket money will be more careful about their weekly or monthly budget and will try not to overspend on unnecessary items. Parents need to educate their children about budgeting from an early age. This can be done by the parent teaching the child how to draw up a weekly or monthly budget. Toiletries, clothes and stationery can be included as necessities. The child can also budget a certain percentage for emergencies and spare money can be used for luxuries like an ice cream treat with friends.

This kind of budgeting teaches the child financial responsibility from a very young age, which will help the individual later on in life when he/she needs to mange his/her own expenses with a limited budget. Children who learn how to budget with pocket money will also have a very good idea about how the ‘ world of money works.’ This can be from savings to credit accounts. The child will already have a working knowledge of how money comes in and goes out of a system. It is up to the parents to educate children on these topics.

Children who budget their pocket money will also realize the value of money. This will stop them from spending on unnecessary items and making foolish purchases. The child will value hard work and sacrifice when it comes to making money. They will respect their parents for the hard work that they put into running household expenses, as the children will come to realise that this is no easy job.

Children who budget their pocket money will also have an idea of the cost of items from foodstuffs to toiletries as the prices tend to rise every so often due to inflation. The child will learn how to shop around for the cheaper prices as they can then ‘stretch’ the budget. The child will learn the art of doing a lot with very little.

Children who budget their pocket money will learn that one does not have to earn a high income in order to be financially secure. A child with a reasonable weekly or monthly allowance can manage to save some money to buy a new bicycle or PlayStation. This money can be invested in a savings account in a bank or some other form of investment. Saving pocket money requires discipline and patience, but over time the child will realise that they can realise their dream of owning a certain possession. It just takes a bit of patience.