Get children thinking about managing money from an early age
Letting your children make small mistakes with money could be good for them says Vicky Shaw
DID you have to do the washing up to earn pocket money as a child, or tidy your bedroom?
While many adults have memories of scrubbing pans or vacuuming to get weekly handouts from their parents, it seems many children nowadays do not have much experience of "earning" cash.
More than one in four (27 per cent) parents of children aged under 12 do not give their children pocket money or financial rewards for carrying out household chores, according to new research.
The survey, from the Financial Services Compensation Scheme (FSCS), reveals that only half (50 per cent) of parents pay their child regular pocket money. And many of those who do give their children regular handouts do not give their child free rein to spend the cash how they like.
More than half (54 per cent) of parents who give pocket money are concerned their child would simply buy chocolate and sweets if they could spend the money how they liked, while more than a third (37 per cent) say their child would buy something they don't really need.
Yet, as with setting children chores so they can earn their pocket money, allowing your child to have a small amount of money to spend how they like – even if this leads to them making mistakes – can help them build experience of handling money. They may even avoid making bigger financial mistakes when they're older as a result.
Rather than raiding their whole piggy bank, a small portion of cash could be set aside for a child to spend how they like, which could help them learn how to set a budget and stick to it.
Nearly a third (31 per cent) of parents say they tend to influence what their child buys with their pocket money, and 24 per cent encourage them to save for a larger purchase.
But nearly four-fifths (79 per cent) of parents agreed that if children can engage with money from a young age, it would help them learn and appreciate its value.
Mark Oakes, head of communications at the FSCS, which protects savers if their bank or building society goes bust, says: "It is a parent's choice how they want to get their child thinking about money, but giving them a little sum of their own to manage is a great way to start. They aren't going to get it right every time, but children need to be given the opportunity to make their own mistakes and learn for themselves."