Why Pocket Money is Important for a Child's Development
Giving pocket money to your kids is a great way to teach them money management while young in their life. Children need direction while learning about budgeting, saving, and other money management skills. By giving pocket money you can teach and empower children to spend responsibly and spend independently. They gradually learn to buy things that they need and are of use. It helps curate smart, sensible financial habits and better decision-making skills. There are multiple benefits of giving pocket money to children, let's go through them.
Plan & Spend: Regular pocket money helps kids to be more conscious of how and where to spend. Kids may start with preparing a personal spending plan or a budget. It helps them outline their money and track their expenses. This way they learn to develop financially responsible habits in the long run.
Value of Money: When kids get their own pocket money, they learn to make smart choices about spending and saving. They appreciate the true value of money. Exposure to real-life situations acts as a vital step in this learning process. This ensures experience-led growth among children and teens.
Habit to Save: The habit of saving needs to be inculcated from an early age. It teaches you the value of planning and patience. The first step would be to teach the kids the difference between wants and needs and then set saving goals. To promote savings parents can also provide some saving incentives for significant milestones.
Learn from mistakes: Money is an important aspect of life. Kids struggle with impulse buying behavior. As parents, it is important to teach children the difference between needs and wants. Kids might overspend on little things though, talking to them about money is an active attempt to teach them to make smarter spending decisions.
Sense of achievement: When kids buy something from the money they have saved, the sense of joy is unmatched. Be it after months of savings or after earning some extra allowance, buying something on your own is an achievement. This also helps them gain independence and confidence to make their own decisions. They find purpose and pride in their purchases and appreciate them more.
If you help build solid money habits early for your kids then they are bound to evolve into grown-ups who experience considerably less financial pressure than individuals who didn't grow up with this sort of experience. Pocket money is a fundamental experience while growing up, and can be an important way to money management and freedom.
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