Teaching Children to Spend Pocket Money Wisely
    School-going children need pocket money for food, stationery and bus fares.  Parents give pocket money to their children in different ways. Some give a lump sum at the beginning of a month or a week.  Others prefer to give pocket money on a daily basis.  The way in which pocket money is given affects how money is spent or saved.  On the other hand, the children's spending habits may affect how pocket money is given.
    Pocket money given on a daily basis is sometimes termed as "food money". Children usually use the pocket money to buy food during recess and also at lunch hour if they have school activities in the afternoon.  They learn how to manage small sums of money.  As the money is limited,they have to control their spending.  Some parents choose this method of allocating pocket money in order to prevent their children from overspending, hoping that in time they can be trusted with larger sums of money. Parents who earn daily wages may also opt for this due to financial constraints.
    Giving pocket money on a daily basis places responsibilities of budgeting on the parents, instead of the child.  The child may spend every single cent of the daily pocket money by overindulging in junk food,as they know they will get another sum of money the next day. This results in children being short-sighted in their spending.  The thought of saving money never crossed their minds.  They may develop the mentality that money is meant to be spent. Others spend more than they are given. They borrow from their siblings or their classmates when they feel like indulging themselves.  Then they may ask for money to pay off their debts.  This habit of borrowing causes them to depend on others to solve their problems. In such instances, the purpose of rationing is defeated.
    Children need to learn how to budget their money.  Some parents go by the "learning by  doing" principle and give their children lump sums at the beginning of the month, and by the third week of the month their account is already dry.
    On the other hand, some learn to budget their pocket money very well and even have savings at the end of the month. They do not borrow money unnecessarily.  In other words, they learn to spend within their means. The key to doing this is to differentiate between needs and wants.  Buy the necessary first, and indulge ourselves only if there is money left.  This habit, when inculcated since young,stands them in good stead when they start working and earning their own money.  It enables them to resist the temptation of “buy now and pay later" schemes.
    Formation of any habit starts at a tender age.  There is no better way to teach children to manage money than to start with their pocket money.  They need to learn the importance of budgeting right from kindergarten days. It is a good idea to start with daily pocket money and move on to monthly pocket money. When children learn to spend within their means, they are able to manage their finances well later in their lives.