My spouse wants to give pocket money to our kid while i am not too sure. Is that a good idea to give pocket money to a 10 year old?
When you are giving your children pocket money, you are also giving them a financial freedom
and giving them an opportunity to take their own decisions. This can easily translate into a well informed child who is aware of financial aspects of savings and investment.
Many parents wonder why they should give a dedicated amount as pocket money to their children when they are present to take care of their needs and desires. Unless you give financial freedom to your child there is no scope for them to learn financial management.
It is okay to give your kid some pocket money as long as it is not a big amount. You must fix a monthly allowance for your children and keep a strict watch on the way they spend money. If they manage their allowance in a smart way, then do not hesitate to reward them by giving gifts or little more money. The monthly allowance helps the child to grow up with more monetary responsibility and brings in a sense of accountability. Here are some other things that you can do.
Let Your Kid Take Small Financial Decisions
You can’t expect the kids to take big financial decisions on their own unless they are comfortable to take small decisions for themselves. For example, when you go shopping give them the liberty to make a choice and decide what they can purchase and why. You can reward them if they manage to shop within a certain limit. It’ll help them focus on value-for-money shopping rather than indulging in over-spending. As the child grows year on year, involve them in possible financial decision making. It’ll make them financially responsible and confident.
Teach The Basics Of Banking
Banking can be the initial step to connect kids with personal finance. Most banks offer a savings bank account facility for the children. By connecting with the bank, children will learn about keeping money in the Savings Bank Account, using a Debit Card and other bank related facilities.
Teach Importance Of Saving And Investments
When children ask for money to fulfil their demand for a toy or a book or any other thing, then the best way would be to ask them to save from their pocket money and afford it. This will teach them a lesson on the importance of saving money. Similarly, teach them about investing and how it can help in growing money in the long term. You can help them by opening a Recurring Deposit account and share the joy of seeing their money grow.
Looking for a Fixed Deposit? Click here.