Pocket money is one of the first ways children can learn the basics of managing money. But not all age groups are entitled to this privilege. How much pocket money you give, when you give it, and whether you give it at all depend on your circumstances, values and financial status.
Giving pocket money to children as young as four or five years helps them start learning about money management, saving and the responsibility of spending wisely. For example, when children get pocket money, they have to make choices about spending or saving it. And if they are saving up, they have to learn about patiently waiting for things they want.
Children will save and spend in consideration of how they watch their parents spend money. It is close to impossible for one to encourage their children to save when they always watch mum or dad shop recklessly on a daily. There are no hard and fast rules about when to start giving children pocket money.
Your child might be ready to start receiving some pocket money if she understands that it’s important to save money, not spend it all and when and how to spend it, so that it is clear that spending it all today means there’s no more until the next handout or visitation day for those in boarding.
It gets even trickier when contemplating the question of how much pocket money to give. You probably have heard those tales of school kids who are given Shs500,000, even a million or more for their pocket money, especially those going to boarding school at secondary level. Ordinarily, your circumstances and what you think is a reasonable amount should help you determine if the pocket money you are giving is adequate. But it is also a decision that you ought to take by assessing how much money is actually required for your child to meet their needs.
Surely it can’t be the case that your child will require 20k for break at school, even after you have packed juice and snacks for them! It shouldn’t be just about how much you can afford to give; it should also be a common sense judgement. We can all tell how much money is too much for a five-year-old, a 10-year-old and a 15-year-old. As long as your child understands how much he or she will get (and how often), he/she can start learning how to use the money well and many times, even when they are given modest sums of money they will be able to prioritise accordingly.
There might be cases where exceptions are justified of course. If your child tells you they are saving for a special game or toy, an outing or school trip, gifts for siblings or friends, then by all means give a little bit more than you would normally or as an alternative, give the usual amount as pocket money and top that up with a contribution to the child’s special financial goal.