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Why Pocket Money Is Good For Your Child

It's a gateway to finanacial literacy no school teaches

BY Agnes Amondi

Sep 20, 2021, 12:00 PM

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Jumbo junior is still a thing. What this is for those who might not be familiar, is a piggy bank for children under the age of 18. Somehow, even if most children might not really understand at the time what they are doing, the joy of having the little piggie toy is encouraging enough for them to sink in a coin or two. 

This money that they are saving up in their mini-bank is what we are talking about today. Pocket money. All of us have at one point in our lives been given or have given pocket money to someone. It’s basically to facilitate part of a child’s or a young adult's expenses. There are different reasons for giving pocket money; it could be as a reward or just as a routine check. Here are others.

Financial Literacy

Those sound like big words but really it’s just about teaching someone about money. By now you will know that the education system does a huge disservice here. Not much comes in the way of how to handle money, at least in a practical way. Much is just theory which most people tend not to remember at least until a situation forces them to.
Handing your child some pocket money regardless of how much or little it is is a good way of initiating conversations around money. Of course, you will monitor what they are doing with it but you also hand them some ‘spending power. This means that they get to decide what to do with the few coins they have. You also make them think hard about prioritising and budgeting because guess what; we all know kids are going to buy tons of sweets, but they’ll also want to have some toys so they’ll kind of have to do some trade-off. 

Another thing here. Kids will also do cost-sharing with friends in order to alleviate the burden of one person buying one item when they need multiple. These are lessons that they can only learn if they rub their hands with some money as they grow. So don’t put off the money chat with your children.

The Value of Money

If you want your child to know what it takes to get money and handle it, then let them experience what it's like to do just that. Take them to the supermarket when you are doing your shopping, big or small. Let them know what a few items here and there cost. Show them that you are also foregoing some of your needs to make sure the most important things are taken care of. And explain it to them. If they want to buy something that costs more than the money you’ve given them, teach them how they can cut costs or perhaps make a plan to get what they want. Also, you can set tasks for them to do after which you can issue them with some pocket money as a reward. This way, they’ll actually see that money is earned and doesn’t just drop from nowhere like the cartoons might have them believe. They will appreciate the things they have and understand how to use their own money.

Create A Savings Culture

When I was in boarding school, some of my classmates just couldn’t save even a Ksh 100 to save their lives. I heard stories of people going broke only after two weeks in a term of fourteen weeks. What I found even more perplexing was the fact that we were allowed to carry snacks to school and at least from my perspective, this ought to have minimised the spending rates. But what do I know? 

Saving money is not just something that comes naturally. It’s something that’s taught and needs to be reinforced. You give your child a certain amount for a specific period. If they run out before that period lapses, too bad. They’ll have to wait this out. Due to this, they’ll be very mindful of how they spend. 

Reward System

If you are using pocket money as a reward system, then you are sending the message that prizes only come after an agreed set of tasks have been accomplished. This might actually help you reinforce a culture of discipline. But one must be careful here. Ensure that the child is not just doing the task as a box-ticking exercise. Let them know that it means so much more than the cash reward. And when it’s properly done, acknowledge that and let them have their money.