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Does pocket money spoil kids?

Pocket money, by definition, means a small sum of money for current expenses.

Providing a weekly or monthly allowance is a tried and tested method to teach children finance but increasingly the pocket seems smaller than the money bundles it holds leading to an irresponsible generation who are financially illiterate.

Experts believe a monthly allowance teaches concepts of ‘needs’ and ‘wants’ and saving for something worthwhile but could also spoil a child if spending is not monitored.

Siobhan McGeever, mother of 16-year-old Emmy, giver her daughter an allowance of Dh250 per month but closely monitors her spending.

“Emmy tends to overspend on cosmetics because she’s at an age where she’s become more conscious of
 herself.

“I ask her to keep a tab on where, what and how much she spends her allowance and tell her to review them with me at the end of every month,” said Siobhan, who works with an advertising agency in Dubai.

Apart from knowing the value of things, handling money gives children concrete understanding of calculations like addition and subtraction, according to Dr Rajeshree Singhania, a neuro-developmental paediatrician at Singhania Children’s Clinic.

“Teaching them value of money can only be done if they are given practical experience in using it. Hence, allowance after the age of six years is an important teaching aide,” she said.

A recent study done by AMRB MENA revealed that Emirati youths are most pampered compared to youths around the world in terms of pocket money as they receive approximately Dh500 (US$130) per week for personal spending.

The amount a child should receive as pocket money should be based on the family’s financial structure, believes Sara Dayal, a trainer and educational consultant.

‘Cut your coat according to your cloth’ is a saying she often reminds parents.

Fatimah Hassan, an Emirati who works at a bank, gives her 17-year-old brother, Sami, Dh500 every week as allowance.

“Since I’m working, I feel responsible of taking care of his needs, so I make sure he has enough for himself,” she said.

Some parents aren’t convinced about the positive effects of pocket money on children.

Prakash Kumar, a Dubai-based technician, says he does not give his daughter and son, aged 11 and 14, allowance because he feels it is unnecessary and may spoil them.

“As parents, we give them everything they need.

“My eldest son, Dhruv, comes to me and asks for money when he goes out with friends on weekends. He usually just asks for Dh50 and I give it to him,” he said.

He added that Dhruv has developed a habit of saving the money he receives from his father.

“He comes to me at times and tells me he does not need the money because he has saved some from 
last time.

“This makes me proud, that my son has learnt the value of money and has learned to save it,” he beamed.

Financial lessons can be taught by allowing children to make their own decisions and weigh their effects.

Two months ago, Emmy splurged her savings on what was considered ‘the latest gadget’ and now regrets it because it is no longer trendy in 
her clique.

Her mother said this has taught her daughter to appreciate money and curb her impulsive buying.

“Money isn’t easy to get. I let my daughter make little mistakes 
like this.

It forced her to start thinking about if she really needs the latest gadgets and things in fashion,” said McGeever, adding that her parents followed the same method when she was young, back in the UK.

Dayal said children should be disciplined in a kind, firm and consistent manner if a parent notices the child spending on unwanted items.

“If the child is misusing his or her allowance, a firm stand should be taken but it should be done in a gentle way so as to make them understand without making them lose self-esteem,” she said. Another aspect Dr Singhania notes is that money should not be used as rewards or payment for household chores.

“If an external incentive is needed to get them to do an inherently boring job, use praise or other forms of rewards rather than money. It must be clear to the parent and child why allowance is being given.

It is not because the parent wants to limit their spending or use it to control their behaviour. It is mainly to teach them how to handle money,” she said.

farhana@khaleejtimes.com

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