Pocket money is an excellent tool to teach kids about earning, spending and saving. We believe that this is an important first step on setting your kids up for future financial independence.
We’ve heard a whole raft of different ways to earn or conversely give pocket money. They vary from a weekly allowance to chore-based activities such as washing the car, taking the rubbish out, walking the dog etc.
Regardless of which way you pay, make sure your kids get the most out of the exercise. You’ll appreciate the benefit of these early teaching when you’re enjoying your retirement!
Here are a few ways to encourage your kids to save and respect money
- Piggy banks and bank accounts are a great way to start. They can see the money they are putting away and watch their money growing. You could even use two piggy banks and set the second one for sharing or donating.
- Pay your kids a bonus when they reach certain savings goals. For example a $10 bonus for every $100 they save. You may even wish to consider the bonus be paid to a charity of your child’s choice, teaching them the importance of giving.
- Non-monetary rewards for reaching certain savings goals are also a great incentive to continue to save. Taking them out for an ice cream or a fun afternoon out once a goal is achieved is a great way to inspire the right behaviour.
- Wall charts are a good visual representation of goals and targets are a great way to maintain engagement with the exercise. Ticking off goals each week with your kids also provides them with both support and encouragement.
Understanding money is more than just saving money. Below are a few activities that help you teach your kids about money. The key is to continue the learning and add in new lessons as the age dictates.
Young kids
Teaching the difference between needs and wants – save and spend. Toys, video games and like fall in the fun bucket and are a want. Teach your kids to save towards a goal.
Older kids
The costs of pet ownership – save, spend, plan and budget. It’s a small amount of expenditure each week, so a good opportunity to teach and learn some responsibility along the way.
Mid Teenagers
First job. Whether its within or external to the household, this teaches the relationship between effort and reward. Kids this age will also have a different view on how they spend their earnings.
Late Teenagers
Saving for a car and running the household. House-hold budgets, setting up buckets for the three F’s: Fixed, Fun and Future. Visibility into household expenditure using your own household as an example or building a mock household that they might want to create in the near future.
We hope a few of these resonate. They are easy to implement and help teach kids about money. Remember, you’ll appreciate the benefit of your kids financial independence when you’re enjoying your retirement!