How to Handle Pocket Money
 When I was a kid my parents would give me pocket money every week and in return they would set a number of chores for me to do. Then every Thursday night dad would dish out my allowance. Unfortunately, it was never the same amount as he had a system that docked a certain amount if I didn't complete my tasks or paid a bonus if I did something extra.
When he paid my allowance he would only give me coins not notes as this was his way of showing me physically how to allocate my money for the various things I wanted.
My parents also used my pocket money as a disciplinary tool and would deduct money or completely withdraw it (even if I did all my allocated tasks) depending on the severity on the offence that I committed. Being the middle child, I seemed to get into trouble a fair bit and having such an interest in money from a young age this was the perfect tool to keep me in line.
My best friend Chris was a different story. His dad was pretty well off and gave him a pretty big allowance every week regardless of wether he did his chores or how much he mucked up. Unfortunately Chris's parents were too busy making themselves richer and used pocket money as their way of making up for the time with him. Despite him receiving a pretty big allowance for a kid he was never a happy. Proving that money can't buy happiness.
As you can see there are many ways to approach pocket money however there is definitely a right way and a wrong way.
So let's look at the right way to handle pocket money:
How Much?
1. Allocate out how much pocket money you can afford - include pocket money as a regular expense in your overall budget so that you can continue to pay it regularly.
Check with other Parents
2. Work out the going rate - ask other parents what they are paying and what they expect in return this will give you an indication but then set the amount you can afford and that you and your partner think fair.
Be Consistent
3. Pay pocket money consistently - whatever day you decide is pocket money pay day stick to it as this helps your kids plan around it and get them ready for when they start earning a regular salary.
Stick to Your System
4. If you have a specific amount you pay don't deviate from it unless you have a bonus or docking system attached. Try to avoid being overly generous when things are good or skipping payments when things are a bit tight.
Get the Kids to Work for it
5. Allocate specific tasks - agree with kids the type of chores you want them to do and set the rate of pay.
Performance
6. Set performance rules - ie if they don't perform they don't get paid. Likewise set their expectations on the types of bonus schemes you are willing to offer and never deviate from these rules.
Money Education
7. Teach them what to do with their pocket money - no matter what their age give them 4 basis areas to think about - Living (for day to day things like food etc), giving (for presents etc), saving (for a new bike, CD or toy of some sort) and wealthing (money for when they get older - for a car, education or even a house).
Show them how to calculate the time they need to allow to save up for something and how that time can be substantially cut by eliminating unnecessary splurges.
Mix it Up
8. Pay them in notes and coins - this will give them the ability to easily allocate their money for different things.
This article is courtesy of Greg Smith of Money-Ed-Box - to learn more about Greg's innovative new Money Box - Click Here |