Pocket Money For Children- What You Should Know

Most parents would agree that children of a certain age must be given pocket money or an allowance to meet their small expenses or pay for their little indulgences. It gives them a sense of responsibility and independence. But opinions vary when it comes to questions about when to start giving pocket money, how much money to give, and whether to link pocket money with household chores. While each family is different and no one rule fits all, it is useful to understand the various aspects involved in these decisions.

- Ankita Dixit

Why pocket money?

Food, clothes and other basic necessities for children are the responsibility of the parents. Pocket money is for all the non-essential, little things that make the lives of the children sweeter. It typically covers treats, small toys or games and special outings such as going to the movies with friends. And sometimes it is used to buy small gifts for friends and members of the family.

Some parents may argue that they could just give their children the money when they require it. But, by doing that, they would deprive their children of the important lessons that receiving regular pocket money can impart. Pocket money helps children experience handling money. This sensitises them to the fact that money needs to be handled with care as it will not last forever.

When they have their own money to spend, children learn to make choices (what they will spend on) and how to get value for money. If they make bad choices and blow up their money on frivolous things, they will soon learn from their mistakes. When children suffer the consequences of their recklessness, they will try to manage their money better the next time around. Giving children pocket money will help hone their budgeting skills – how to stagger purchases over a specific period, with the amount of money that they have. They will realise that if they spend all their money too soon, it will be difficult for them to manage for the remaining duration. This will teach them financial discipline and they will be more wary of getting into debt when they grow up.