Most children live with their parents til they reach majority (or older). I did not – I went to boarding school from the age of 10. I think that’s a large reason why I’m financially responsible (and independent) now.
I’d like to share my experiences and hope it’ll give another way that parents can look at teaching their children about money, budgeting and priorities.
Set a time based budget
My father gave me a cheque every term for the term’s expenses. I knew how long a term was (at 10, you can read a calendar!) This was ‘walking around money’ – money for movies, snacks, outings like ice skating, but also gifts for friends and family. My meals were provided from the school, which including morning and afternoon tea. But that’s no soft drink or chocolate bars! When I started, at age 10 in 1995, I was given $100 a term. It worked out to about $10 a week. The reason I think this works well, is it gives you a good window to look at what you want to do, and what you’ll have to spend. If I’d started with a weekly or fortnightly ‘pay’ or pocket money, I might have spent it all each period, knowing more was coming soon. A term is a longer amount of time to forecast for, and teaches discipline quickly!
Know what’s included and what’s not. My pocket money did not (generally) include any toliteries – those were refreshed in the holidays. Clothing wasn’t included in this amount either – I do like how 71 toes does it – the children contribute a percentage of clothing purchases, which I think is fair and a good way to slowly transition to full ownership of this cost (that link’ll teach you all about their system too). I also could ‘charge back’ any expenses at the school’s clothing shop, and any medical appointments or taxis (to the airport or medical appointments) were all on an account that my father settled with my fees.
To withdraw money, we had to go to the office (at set times, as I recall), and ask for the amount we wanted. We then had to find out ledger sheet, and subtract the amount from our total. It was great maths practice, but also gave us an idea of how much left.
By signing over a lump sum to your child allows them to ‘own’ some money, but also some responsibility. Try not to cave into paying for things that should come out of the child’s budget. I don’t think it hurts for kids to have to pay for their ice cream or their pop corn at the movies (heartless parent I’m going to be!) A few ‘ouch’ moments teach more than someone swooping in and solving it!
The system above worked for a number of years, when I didn’t have access to an ATM for a bank deposited amount. When we were allowed more freedom as boarders, Dad moved away from the school based cheque system, and went to putting money in my bank account every time he got paid. As I’d learnt to manage a lump sum, it wasn’t much of a stretch to adjust to a fortnight pay schedule and ‘save’ for the future.
What are your thoughts and the pocket money systems you use/used (or had used on you)?