Managing pocket money

You might have noticed in table 3.2 that one of the fixed expenses we budget for is pocket money for the kids. This is not a necessity, but we made a decision that we would give pocket money to our kids to teach them practical finance lessons such as:

• the value of money: for example, understanding the cost of items and toys

• decision making: how best to use their limited funds

• saving: setting themselves goals — both short- and long-term — for how they’ll spend their money

• not being influenced by advertising: when they see something in a catalogue or on TV and they say they want to spend their pocket money on it, this is the perfect opportunity to explain the purpose of advertising, and how to question what they’re hearing and reading