Bringing Kids Pocket Money into The 21st Century
As parents we want the best for our children, better than we had it growing up, but at the same time teaching responsibility and for them to learn and know the value of things.
A fine line to walk, especially when we are dealing with our little clones, the loves of our lives.
It is hard to say no to them.
When it comes time to teach them about money and personal finances, many of us as parents just teach by example. There are no lessons to be sat down and learned, our children just watch us and learn.
And many of us have poor money and personal finance habits. We may not save as we should, or we may over-extend ourselves with credit, all poor examples to lead by.
One of the first things that children have as a way of learning about money and spending is pocket money, or in some countries, an allowance.
In some instances children are expected to do certain chores in order to receive their pocket money, things like clean their rooms, take out the rubbish, walk the dog, small chores and tasks and at the end of each week, a small amount of cash is passed their way.
Then there also are holidays and birthdays, and grand parents, all of which a child may receive a few pounds or more, to do with as they wish.
As parents we may stress the importance of saving for later or for larger purchases, but many kids just want to buy what they want to buy, and buy it now.
However, putting all that aside, we do need to teach our children good money habits, and with that idea, as the world changes, keeping things current for our kids.
The use of credit cards, debit cards, and other forms of paying for purchases has now exceeded those purchases made by using dirty old money. So it would appear we are moving away from using cash.
Which begs the question, if we do not need cash, do we need ATM’s?
Moving that thought and question aside, if we are moving away form cash, what about our children’s pocket money?
If we want our children to learn about money and develop good spending habits, then they may as well learn in the real world, and the real world is becoming cashless. So why not give pocket money in a cashless form, maybe pre-paid cards they could use, or open bank accounts that they could use a debit card, or what about a smart phone app for pocket money?
This is all becoming a reality, and not without its own set of concerns and issues.
There already is a pocket money app “RoosterMoney” that can be used.
This allows not only a way to give kids their pocket money in a digital, modern age form, but also monitor where and how they are spending.
You give a child cash, who knows where they spend it, through the use of an app or other traceable means, you can see where they are spending the money you give them.
You can also limit their spending, and there can be “off-limits” places where they cannot spend their money, such as for some online purchases.
Resolver, a complaints web site’s, Martyn James states, “There’s an assumption that kids today are all spoilt and indulged. Actually, child poverty is shockingly widespread. So, helping all children with money, and those who don’t have any, has to be a priority if new generations are to escape the debt trap.”
However, there are those that feel this is not the best or appropriate way to give kids money to spend. And if so, at what age should we begin this?
Each child is different.
Sue Anderson, a spokesperson for StepChange stated, “To children, these ‘learner’ debt cards may feel like play, yet the money and the spending that sits behind them is real.”
“The challenge for parents is to make sure that they consciously use these kinds of tools to help build and nurture their children’s budgeting and money management skills, rather than helping their children develop an early taste for retail therapy.”
It is thought that children first begin to learn about money at age three (3).
The Senior Policy Manager at the Money and Pensions Service Ann Griffiths states, “Our research has shown a strong link between children receiving regular money, including pocket money, and better financial habits.”
“There are many other simple things parents can do, such as involving children in food shopping choices, discussing choices and responsibilities like paying bills, and showing children money tasks like checking a bank balance.”
So maybe the idea of giving pocket money via debit cards and other non-cash means is a good thing. It certainly would prepare our children for what may be the cashless future.
Oxford Risk’s Head of Behavioural Science, Greg Davies says regarding the fact that using a card or other ways to pay besides cash can be “less emotionally painful”, and can remove the buyer from the actual act of buying. He goes on to say, “I think it is very important for parents to ensure that spending is only permitted when the child is fully aware of the amount, and after due reflection that this is what they want to purchase. Such cards will make this more difficult, so parental monitoring is crucial,” he says, adding that slowing down impulsive behaviour, and helping to reflect on purchases, would help children spend better.”
“Functionality to require kids to acknowledge the amount, confirm that they really want to spend this now, and perhaps offer clear examples of what the money could purchase as an alternative, might all slow down impulsive decisions.”
“We could also consider functionality that requires children to ‘release’ money for larger purchases some hours before actually buying, ensuring that bigger items are not bought on immediate impulse.”
“As a general rule for parents – independent of the debit card question – the more you can ensure that kids have to wait some time, sleeping on it for example, before making any decision, the more likely it is that the decision will be something genuinely coveted rather than merely impulsive.”
Of course as with all things regarding our children, we still need to be cautious parents and not just be aware, but also keep a watch on what our children spend their pocket money on, and teach good money habits.