Pocket money – the term itself is exciting enough to bring a smile on the face of most kids. But whether pocket money is good or bad for kids is a thought-provoking topic that needs attention. There are different perspectives to this topic and we will cover those here.
If we contemplate the good side of pocket money, we can say that pocket money helps in motivating kids to do different tasks by rewarding them financially. Kids would gladly help parents with any household chore or any odd job, if they get financial rewards in return. Also, rewarding them financially to appreciate them for a good deed or an achievement helps in boosting the morale of kids and encourages them to succeed more in future.
Such financial rewards can also help in teaching kids about money. Parents can talk to kids about the value of money while giving them a small amount of pocket money for use. However, giving money in excess or giving huge sums of money every week or month can even spoil the kid in certain cases. In fact, parents should encourage kids to save money. They should guide their kids to save their pocket money in piggy banks, which they could use later for buying a special toy, apparel or book. Kids can also be taught about the short-term and long-term benefits of saving money.
Pocket money can also help children acquire knowledge of money management. Young children of four to seven years can learn the tactics of managing money and understand the importance of money and how hard it is to earn.
On the contrary, considering the bad aspect of pocket money, it can spoil some children. Moreover, it can be the cause of embarrassment for some kids who cannot afford to have pocket money, especially for kids who belong to families from lower income groups. It might also put pressure on such parents who due to poverty or lack of work cannot give pocket money to their children.
However, if we consider the different aspects of pocket money or financial rewards for kids, we can say that a small amount of money given to appreciate or encourage the kids doesn’t do any harm. However, it is up to the parents to use this opportunity to explain to the kids about the useful life lessons that pocket money can teach. Lessons on value of money, spending money, earning and saving money, investments, borrowing and such other things can be addressed to kids by giving a little amount of pocket money now and then as financial reward.
Of course, with some effort, parents can shape the behaviour of kids through financial rewards and can achieve financial literacy for kids.