When it comes to financial education for children, dry theory never works. Budget management and a healthy approach to money need to be taught through practice, and pocket money is the best way to do this. See what you need to know about it.
Pocket Money 2.0 – what you need to know:
- Practice is the key to success. The best form of financial education for children is giving them an allowance. This allows them to learn money management, decision-making, and accountability in a safe environment. It's a lifelong learning experience that starts small.
- Adjust your pocket money to your age and needs. Introduce pocket money when your child starts school. For a 7-year-old, small amounts are enough to learn the basics. For a 10-year-old, you can increase the amount by teaching them budgeting, and for 12-year-olds and older, it's worth giving them more freedom to manage larger sums.
- Bet on "digital pocket money" and new technologies. Instead of cash, consider modern solutions like the Maxcom Pay NFC wristband. It's not only a fun gadget, but also a secure tool that teaches children how to use cashless payments, giving them a sense of independence and giving parents control.
- Pocket money is a tool, not a goal. The amount of pocket money should be tailored to the family's financial capabilities, not to the expectations of peers. The most important thing is the educational value and learning to manage a budget responsibly, regardless of its size.
Pocket money – how does it teach financial responsibility?
Regardless of whether you have 100 or 1000 złoty at your disposal, the same basic principles of budgeting apply in both cases. Moreover, with smaller amounts, mistakes are less costly, and the lessons learned are remembered for a lifetime.
This is why it is worth ensuring proper financial education for children – on your own, because in this case it is best not to rely solely on school knowledge. Effective learning should focus on practice and creating a safe space to observe desired patterns and imitate them. Children watch how their parents handle money and then adopt their habits: first on the mini-scale of pocket money, and later with their first salary from work.
Although the approach to money should be primarily practical, it is also worth presenting the other side of the coin to your child. Finances are not an end in themselves, but serve to provide a sense of security and the opportunity to fulfill dreams – they can therefore also be treated as an inspiration to reach further and get more out of life.
Pocket money as a financial education tool
For preschoolers, financial education may be limited to observing and imitating their parents in a friendly atmosphere. As they enter first grade, their needs may change, creating the perfect opportunity to introduce the next, more practical stage of learning. A child's allowance can be a helpful tool here.
In theory, this money is meant for your child to spend on whatever they want. Your role is to guide them so they realize there's no point in spending it all on something they'll soon forget about. Waiting for something better, for which you first have to save up, brings immense satisfaction and the joy of having achieved something. Now it's buying your dream bike, and in a dozen years, it might be a car or your first apartment.
Giving your child pocket money is a good way to help them understand that things on store shelves aren't always readily available. Your little one sees how much money they have in their piggy bank and the price of the item they want to buy – thus, they begin to understand the value of money. On the other hand, if he spends all his money on one thing and then likes something else, he will discover the consequences behind ill-considered financial decisions.
While this may sound cliché, it works the same way for adults, albeit on a larger scale. Spending your savings on a fancy dinner or designer clothes might be tempting in the moment, but in the long run, it's more important to feel safe when the unexpected happens.
When should you start giving pocket money to your child?
While there's nothing wrong with putting money in a baby's piggy bank, a child won't truly appreciate it until they start school. That's when they'll discover the meaning behind the numbers and how adding or subtracting them affects what they can afford.
It is important not only to know when pocket money is a good idea for a child, but also how it affects their financial education depending on their age.
Pocket money for a 7-year-old
Most students starting primary school do not have high expectations regarding pocket money, so a few or a dozen zlotys a week is enough to cover the small expenses of such a little one.
Pocket money for a 7-year-old has a symbolic function and is primarily intended to help them learn the basics. Your child should understand how their savings accumulate and dwindle. This is also a good time to show them that momentary whims quickly become boring, so it's not worth making hasty decisions.
Pocket money for a 10-year-old
You can entrust an older child with a slightly larger amount (e.g., 20-30 złoty a week) without worrying about them spending it all on sweets or fast food. At this stage, children are more responsible, so it's a good time to plan a budget, for example, setting aside pocket money for several different purposes.
This amount of pocket money for a 10-year-old is also enough to show him the difference between the cheapest and the most expensive products. You can teach him that sometimes it's better to wait and buy something decent than to waste money on something that is of poor quality and will break quickly.
Pocket money for a 12-year-old
Teenage life has its own unique rules, and this means more expenses than ever before. Going out with peers, after-school activities, or buying cool gadgets are just a few ideas for what a 12-year-old or older child can spend their pocket money on. Therefore, it's worth considering a slightly higher amount, for example, 50 złoty per week.
At this stage of development, you can give your young person a little more freedom in making financial decisions. Of course, despite everything, exercise discreet control over it and talk openly about finances.
How to determine the amount of pocket money for a child?
The amount of pocket money is irrelevant to its educational value or the child's self-esteem. Therefore, it's worth tailoring it to your own capabilities as well as factors related to the young person, including their:
- century – As children grow older, their goals and dreams grow, so you might want to consider increasing their pocket money,
- needs – the extra money can be used by the child for all the pleasures or only for the bigger ones, because the rest will be covered by you,
- interests – Some hobbies can be expensive, so too little pocket money could prevent you from developing your passion.
Also remember that you don't have to feel bad if you can't provide your child with the same amount of pocket money that their peers get. The most important thing is that you give him a good start in the future and show him how to manage the budget he has wisely.
How does technology support learning about money?
In theory, pocket money can simply be cash given regularly at specific intervals, such as once a week or once a month. However, remember that your child is very comfortable with modern technology and will certainly appreciate a cool gadget that motivates them to learn financial management.
Modern methods of pocket money management
If you're opting for "digital pocket money," kids might be interested in the Maxcom Pay NFC wristband. It's lightweight and comfortable for everyday use, yet incredibly easy to use. As long as you configure it in advance and connect your debit card to it, all you need to do is bring your wrist close to the terminal to pay for something.
The big advantage of such a pocket-sized one is that you can always have it at hand and it is impossible to lose it. If a child encounters an unexpected situation, he or she will be able to cope with it even if the wallet is left at home. The wristband strap fits snugly around your hand, so you don't have to worry about losing it, and if a pickpocket appears on the horizon, they won't be able to read the information on your payment card because it's encrypted with a token.
From a parent's perspective, the NFC wristband provides peace of mind and the ability to supervise their child's financial education, while leaving them with a feeling of complete freedom. Simply set daily transaction limits and regularly check your transaction history. However, any mistakes shouldn't be considered a bad thing or something to be punished. They're an opportunity to learn and draw conclusions.
Pocket Money 2.0 – controlled financial independence of the child
It doesn't matter what form you take to pay your pocket money. However, children definitely prefer to manage their money in a digital form rather than putting banknotes and coins into a traditional piggy bank. With Maxcom Pay, you can provide young people with comfortable, safe learning conditions and help them develop good habits that they will thank you for later.
FAQ - frequently asked questions
When is it worth thinking about pocket money?
It's recommended to introduce your own money when your child can count fairly well, so they know what denominations they're dealing with. A good time to introduce them is before school starts, i.e., in the first year of primary school.
How should you react when your child spends all their pocket money at once?
Financial education involves the risk of making mistakes and learning from them. Above all, don't get angry with your child or show disappointment. Instead, discuss the matter calmly and explain to them what they can gain by starting to save money for a specific purpose from their next allowance.
Is it better to give pocket money weekly or monthly?
You must adjust this issue to your financial capabilities and the needs of your child.