Providing your children with pocket money is a great way to teach the importance of financial responsibility, that money has a person and understand the value attached to money. Children gain confidence through earning, deciding how to spend and practicing skills in saving. This preparation helps them become more better equipped to handle financial situations in the future. Lessons in money management allow them to learn from their mistakes now rather than in the future when the results can have more permanent consequences.
Deciding How Money Is Earned
Parents differ in their opinion on how children should earn their pocket money. Some give it without expecting work in return. Some prefer to pay children for doing chores and others believe that as a member of the family they should contribute without expecting to be rewarded.
Certainly you can still teach them money management skills while freely giving money. But, most parents pay in exchange for chores to start teaching kids that money is earned through work. But, deciding what jobs will be required for payment can be tough and differ between families.
Paid Jobs And Family Jobs
The difference between paid jobs and family jobs should be clearly outlined and the reason explained to the child. As adults, they will not be paid for cleaning up after themselves or maintaining their home. They will learn that they have to work in order to earn money.
Examples of family chores can include: cleaning their room, making their bed, setting the table and putting away toys or personal items left in common spaces. Paid jobs can be other household jobs that parents would otherwise do, such as taking out the trash, vacuuming, sweeping and moping, doing laundry, washing dishes or washing the car.
Stipulations For Pay
Starting out with small amounts per job is a good idea. This allows room to increase the amount as the child ages and the tasks become more complex, are required more frequently or you add more. Also, children can learn negotiation skills and when and how to ask for a raise. You could also advance money to be paid back in a set number of deductions from future payments. This will teach skills required for lines of credit and repayment of loans.
Whichever scenario you decide works best for your family set conditions. Be clear in the conditions,. Enforce your child consistently meets the conditions and ensure you consistently provide payment. The earlier children learn the value, necessity and satisfaction of successful money management the better equipped they will be for their financial future.