First, let’s be clear that we are referring to pocket money – as in the money we give to our children unconditionally.
It is not tied to household chores or any other work.
There are so many different opinions on its appropriateness and so many different ways of doing the money thing with kids.
We want our children to learn how to budget, so we give them pocket money to manage. We want our children to learn how to spend wisely and responsibly, so we give them money and guide their spending decisions.
Some of us don’t agree that children should be given free money, so we don’t give pocket money at all.
Why all these differences in opinions and methods? Because money is tied to a family’s values, attitudes and beliefs and these will differ from family to family.
Which one is correct? They all are – it is your family’s values, attitudes and beliefs.
Pocket money itself doesn’t teach financial literacy. Used incorrectly, it actually has a negative effect.
But used correctly, it is a powerful teaching tool.
When we are intentional in teaching our children about money, we use pocket money intentionally. We have intentional conversations with our children about money.
We explain the lessons we want our children to learn from pocket money and guide our children in using the money.
Intentional teaching can also involve teaching children why they don’t get any.
If it is not part of the family’s values, attitudes and beliefs that children should get free money, then we intentionally decide that the children won’t be given pocket money.
We have intentional conversations with our children about having to earn their money instead, by doing household chores.
So whether you decide to give your children money or not, your decision must be compatible with your family’s values, attitudes and beliefs.
The more important thing is the conversations you will have with your children about money.
These conversations will build their financial literacy. Pocket money is one tool you can use to teach them.