"When a kid saves money, it is not a mathematical event.
It is a maturity event that gives dignity.”
Dave Ramsey & Rachel Cruze (his daughter)
I have a 14-year daughter and an 11 (nearly 12) year old son. My daughter receives pocket money into her bank account every week and my son doesn’t, yet, but will do from next month.
But, I feel I have started giving pocket money too late. Why? I’ll tell you.
Our money habits and behaviours, research tells us, are formed before the age of 7 (oops … and argh!).
Ultimately, lots of habits and behaviours are formed in those our early years (not just our financial ones). But don’t panic. We can change our habits and behaviours at any time.
How does this tie in with my feeling that I started giving pocket money a bit late?
Because I would have liked our children to have the opportunity to make money choices of their own regularly, and early. So that they can practice saving, spending, and creating habits and behaviours that will be useful to them as they grow up.
When a child receives money other than pocket money, it tends to be extremely exciting and momentous. Whether it is from a relative for a birthday gift, or a tiptoeing (I mean, flying, of course) tooth fairy subtly sneaking it under a pillow, it is rare, occasional and a treasure.
Receiving money in the irregular, gift-giving way, puts a lot of pressure on the event and gives a lot of power to the money. Which brings me back to why I wish I had started earlier … giving regular pocket money, little and often, gives opportunities to practice and make choices with their money more often. It gives rise to conversation. It introduces the idea of balance.
It gives the power to the child, not to the money or the gift-giver.
But it is never too late to start. To start giving pocket money. To start teaching our children about money. To start creating healthy, useful, habits and behaviours around money.
So what do we really want to teach our children about money?
What does money actually mean to you? Or to them? And how will they practice with it before they arrive as adults in the big wide world?
Unsurprisingly, money is not a taboo subject in our house. We talk about saving, investing and spending quite openly. And we try to make it relatable. We stay away from phrases such as ‘we can’t afford it’ and instead use phrases such as ‘we are choosing to’.
Rather than money being in control, we are the ones in control.
For example, say the kids are (intensely) nagging for a takeaway this weekend, but we as adults know we have a holiday coming up this summer that we want to save towards.
Do we respond saying:
“We can’t afford a takeaway because otherwise we’d have no money for meals out on holiday this summer”.
Or
“We have chosen not to have a takeaway this weekend as we are saving towards our summer holiday and are excited to have more money to spend on meals out when we’re there.”
The first reply feels like a deprivation. Money has the control there.
The second reply feels like a choice. With an exciting endgame. We are using our money intentionally.
I hope our children will see money as a tool and that is in their control to choose what to do with.
Not to be intimidated or dominated by. And that, in turn, they will become more measured and intentional with their money. They can make choices. What will they save? What will they spend? What will they invest/plan for future use?
I recently contributed to this article which discussed some of the pros and cons of giving children pocket money, along with whether or not it should be links to chores. I think it’s an interesting read – what do you think?
Whether we are comfortable with money or not ...
... the truth is that we will have a lifelong relationship with money. By receiving pocket money, children can make financial choices early on and practice budgeting, saving and spending. It also gives them an important opportunity to make mistakes and learn from these mistakes which in turn informs their future selves.
And don't forget, if you would like some support with your own relationship with money, or help with communicating about money with your children, don't forget that you can book a FREE mini 121 with me to chat about ways I could help.