Using pocket money, children learn responsible financial management with small sums of money. The amount is less important than the lessons learned.
Key Points:
- Pocket money promotes children’s correct handling of money.
- Children learn financial management skills.
- Saving or spending and deciding what for, teaches responsible money management.
- Should I give my child pocket money? And if so, how much?
Every parent eventually asks themselves these questions, perhaps when children are nagging for ice cream. In such cases, referring to their own money quickly relieves parents. But what else is pocket money good for?
A representative Forsa survey in 2022 showed that just over half of all parents regularly give their children pocket money.
Parents largely base the amount of pocket money on their children’s age (63 percent).
Finance: How Much Pocket Money Is Appropriate?
An age-appropriate amount that increases with age is sensible.
However, the amount of pocket money is not crucial. What’s more important is that children receive a small, regular amount without asking, which they can freely spend.
This way, children can learn early on how to handle finances. For larger wishes, they may need to save up first.
Children’s Finances: What They Spend Their Pocket Money On
Parents who don’t give pocket money argue, according to experts, that the amounts can’t buy anything of value. Instead of the positive experience of fulfilling a wish, the child experiences frustration.
Christian Heck, an expert in child development and youth protection, believes even small amounts are valuable:
“Sometimes, as adults, it’s hard for us to accept what children spend money on. But these are important experiences that we must allow.”
Because it’s better for children to gain these experiences at a young age with small amounts of money than to handle larger sums unskilled later, according to Heck.
Children particularly enjoy spending their money on toys, magazines, or sweets. Adolescents, on the other hand, spend more on fast food, going out, and their phones.
The biggest gender difference is that girls prefer clothes while boys prefer anything related to computers.
A Good Idea? Attaching Conditions to Payment
At least a quarter of all parents link pocket money payment to conditions such as good grades or specific behavior.
Experts are divided on this: Money can indeed be an incentive to strive for improvement. In the adult world, there are later salary increases for exceptional performance. So, there could be a parallel or a learning effect.
But what if the child tries hard and still doesn’t get good grades? Then they are doubly punished.
From a professional perspective, Christian Heck does not find conditions sensible: “Do not link the security of regular pocket money to performance.
Think back to your own childhood: Could you freely use your pocket money? What would you have wished for?”
Parents’ role is to provide advisory support in their children’s financial learning process. They should impose as few conditions and restrictions as possible.
These small steps in financial matters are crucial for learning responsible money management.
Financially competent individuals know that managing money and the resulting financial independence are crucial for a self-determined life. The earlier children learn this, the better.
