So when the pleas for extra pocket money arrive, it will be a lot more useful in the long term if you say “no”. Make sure, however that you offer to help.
Identify the problem
Despite what your child is telling you, the problem isn’t necessarily that they’re not getting enough pocket money. Sit down with them and find out exactly what they’re spending their money on so you can see where things can be improved.
It’s likely the things they’re buying aren’t absolutely necessary, so it’s worthwhile teaching them how to prioritise. Get them to list some of the key items they want and then help them order their wish list in terms of preference. They should only move on to buy the next item down the list once they have saved enough money.
Build a budget
A budget doesn’t have to be anything too serious at this age. It can be as simple as using three money boxes to distinguish between spending, saving and donating
If you want to be a bit more detailed with the budget, you can break spending down into further categories such as food, toys and clothes.
Set savings goals
Saving is a way to make sure that your kids won’t run out of money in the future. Using the items they want on their wish list will help motivate your child to start putting money away. Once you’ve agreed on an amount per week, put together a savings tracker so that you can both monitor the progress. Keeping the savings tracker somewhere visible in the home like on the fridge or a bedroom wall will help to keep saving front of mind.
Remind them that mistakes are okay
The reality is that we all make mistakes with money. The good news is that the younger you are when you make these mistakes the less likely they are to impact your finances in the long term and the more chances you have to right your wrongs. So overspending $10 may not be great but it’s also not a huge price to pay to learn some valuable lessons about money management.