The pros and cons of pocket money
Choosing to give your children pocket money or just buying them what they want is a hard choice. So let’s look at the pros and cons of giving children pocket money to help you decide.
Pros of pocket money:
Pocket money helps children learn about financial management in a natural way. They will make all the money decisions that adults make but on a smaller scale. This increases their knowledge and ability to manage money.
1. Learn to manage limited resources
Children will learn how to make a limited resource – pocket money – last until they receive more. This allows them to practise the choices they will make as adults when they need to make their salaries last the month.
2. Learn to save and budget
If children want expensive items, giving them pocket money teaches them to save for it instead of just asking for it.
Receiving pocket money can also teach children about planning, like buying some Christmas gifts weeks or months in advance so they still have some money to play with in December.
And if you ask them to report back on their spending, they’ll learn to stick to a budget and keep track of their spending.
3. Learn about money choices
Your children will learn to weigh up the pros and cons of each purchase. They will become used to asking themselves questions like:
· Do I really want this item?
· Is it worth the money?
· Is there a cheaper option?
A bonus for parents is that children won’t nag them for sweets or toys in the supermarket if they can buy those from their pocket money.
With our FLX prepaid card and savings app, you can set up automatic pocket money transfers to your child (e.g. weekly or monthly). Your child can then use the FLX app to set savings goals and track their progress.
Cons of pocket money:
Pocket money can teach children bad money habits or make it easier for them to make poor choices.
1. They won’t learn the value of money
If you just hand over pocket money, you’re teaching your children to expect something for nothing. And they may learn to depend on you instead of being resourceful.
However, with FLX you can set up pocket money to reward your child for completing chores. This may help them learn about the value of money.
2. They may buy junk or frivolous items
If there are no guidelines on what they can spend their money on, your children may buy a worrying amount of junk food or splurge on toys they rarely use.
But with FLX you’ll receive a Flexischools app notification every time your child purchases something, so you know where they’re spending their money. You may like to sit down with your child and go through their recent purchases to discuss when they should have saved their money.
3. They may face increased peer pressure or bullying
If children receive more money than their friends, there’s a chance their friends could take advantage of them.
And if they receive less pocket money, they may feel left out or resentful.
So what should you do?
Giving your children pocket money or not is a personal choice and will depend on your circumstances. Children also learn by watching you, so make sure you have good financial habits they can copy.
But there are many benefits to teaching your children financial responsibility from a young age. And there are apps like FLX that can help you manage the risks.
Our FLX card and savings app is a safe and secure way to give your child pocket money. It can also help your child make smart purchases and learn to save. Find out more about the FLX App here.
This is general advice. Read the PDSs & TMDs at www.flexischools.com.au/legal before deciding if FLX is right for you. The FLX Services & Flexischools are provided by InLoop Pty Ltd ABN 27 114 508 771 AFSL 471558 (trading as Flexischools). The FLX Prepaid Mastercard is issued by EML Payment Solutions Limited ABN 30 131 436 532 AFSL 404131 pursuant to license by Mastercard Asia/Pacific Pte. Ltd.