Sometimes it can seem like children are constantly asking for one thing or another, which can feel quite overwhelming, but why not use it as a chance to teach them the value of money?
I want those! Lyla has those shoes, why can't I have it? But I'll be good! You never buy me anything!
These are words most parents have heard (or will hear at some point) but rather than giving in or flat out saying no, why not use the experience to help your child understand the value of money?
Parents aren't made of money, but if children become used to getting what they ask for, they might not always realise that someone has to work hard to be able to afford that must-have water bottle or the latest Switch game. Everyone is in a different financial situation and it's important to realise that children can start to understand some simple concepts relating to money from a young age.
Pocket money doesn't have to be free; it can be attached to small tasks around the house that you expect your child to help with anyway. Be it making their beds, helping with the dishes or even matching socks, having children help around the house and rewarding them for it is a good way to start them thinking. Some parents choose to allocate pocket money to extra chores so that their child doesn’t start to think they will be paid for everything they do, while others like to call it a salary. However you label it, it's the first time your child has money that is their own. What they do with this money can either be left up to them, or you can help them manage it and decide together how to spend it.
Keep it in a Safe Place
First things first, your child will need somewhere to store their money. If they are old enough, let them help you pick out a piggy bank to keep in their room. If not, find something timeless that won't seem babyish as they grow up.
Decide on a minimum amount to save and then take a trip to the bank together and open a savings account. Keep setting goals and make sure they are involved in depositing money as they will feel a sense of achievement. The point of taking it to the bank is that it's harder for them to spend once it's in a safe place, it also makes them feel grown up and you are less likely to borrow it for parking or the shopping trolley.
Set a Target
Everyone likes to get what they want when they want it. But the latest trending or viral item changes quickly when you’re a child. This week something may be a ‘must-have’ but does your child really want the item or do they just want what everyone else has?
Saving up for something they really want is a great way to understand how long money takes to add up. It also gives them time to see if they still want it in a months’ time, or if it was just a passing craze. Knowing it took weeks to save for the new item of clothing or toy will also help your child to take better care of their possessions. Setting targets is essentially budgeting, which is great life skill to have. If they are saving for something big, why not offer to match their savings, so when they hit the halfway point, you'll pitch in the other half.
Waiting for a special occasion, like a birthday, holiday or a milestone, helps to teach your child that you are listening, but that they won't get something just because they ask for it.
Need vs Want
We all want things; the question is do we need them? Your child may come home from school and need a new pair of trainers, but want the newest, coolest pair around. Offer to pay for a basic pair of trainers without the bells and whistles to fulfil the need but give them a chance to use their savings to upgrade to the pair they want. You aren't saying no, you aren't being mean, but you are teaching a valuable lesson that they will take with them into adulthood. If they must go without buying something else with their money, they may think twice about needing the most expensive pair. Or they may be happy with their purchase and feel proud that they contributed.
Try a Prepaid Card
A prepaid card can be a great alternative to cash pocket money to teach them how to spend wisely. There are two main types of cards – prepaid cards or debit cards (these come with children’s bank accounts). Both work in a similar way and won’t let your child spend more than the balance on the card, but a prepaid card usually comes with an app to allow you to monitor spending, and a child can apply for one from the age of six. You can also set spending limits with a prepaid card. Think of them like a pay-as-you-go mobile. You load money onto it, and they can’t go over that limit. It can then be used in most places that accept card.
If your child is a little older (beyond the piggy bank age) then a prepaid card topped up with their pocket money and birthday money can be a good way to teach them the value of money. They can choose how to spend it, but once the card has reached its limit, the money is gone until the next top-up.