With EOFY only just behind us, we’ve got money on our minds – specifically, how we should teach our kids about it. And while the approach to this topic varies from family to family, we’ve been wondering: are there any hard and fast rules parents may want to keep in mind? Brisbane psychologist Dr Aaron Frost says yes.
Whether you give your kids regular pocket money or not, there are valuable lessons – about not only finances, but life in general – that can come from cold hard cash.
Aaron says that while what parents should be paying their children depends on what they expect them to do with it, there should always be a subtle lesson to be learned.
“With a seven-year-old, for example, you want to teach them about the value of saving their money for something they really want – it may be a toy or a new book, for example,” says Aaron. “As a parent, I would look to give them enough pocket money that they can eventually save up and purchase something they really want.
“On the other hand, with a 10-year-old, they should have already learned this lesson – for them, I would hope to teach them more about basic budgeting.”
As a general rule of thumb, Aaron says parents who give their children more pocket money may want to consider having their children do more with it – when they want a new app or a football, for example, it comes out of their pocket money.
“The earlier children learn that everything comes with a price, and that they can make their money stretch as long or short as they like, the better,” says Aaron. “This will come in particularly handy when they become teenagers who insist on more expensive branded clothing. When they have to pay for it themselves, they might just decide that the $10 Target t-shirt is just as good as the $90 Nike t-shirt – or, they will be willing to cover the difference.”
Wanting to get your kids motivated to earn and save money through basic chores at home? Here are some ideas:
- The chore list: This is the best place to start and should be a joint initiative. Sit down with your kid/s and decide together what jobs should go on the list, then store that list in a common place like the fridge or even the back of the toilet door.
- The pay cheque: When deciding on an amount for pocket money, the ‘one dollar per year of their age per week’ is a popular approach. So, your seven-year-old daughter might earn $7/week via a relevant set of tasks.
- The bigger picture: Encourage your child to save a portion of their pocket money to get them into the habit of saving from an early age. Set a savings goal that’s relevant and relative to their age, but don’t be too rigid with them. Just like us adults, there’s got to be some reward for all the hard work. Otherwise, why would we do it?!