Pocket money/ Allowance
Teaching Kids Financial Responsibility: The Pocket Money Experiment
When it comes to parenting, teaching life skills often starts young. One area we wanted to focus on was financial literacy for our children, (dad’s in finance), and pocket money became our chosen tool. We decided to make it a learning experience for our kids, aged 10, 9, 5, and 4, and the results have been both heartwarming and enlightening.
A Creative Start
For our older daughters, Amani and Sara , who were 10 and 9 at the time, we approached the concept as a challenge. Before receiving pocket money, they had to present a case for why they should get it. With a touch of excitement and curiosity, they prepared a small presentation. They explained why pocket money mattered to them, what they planned to buy, and how it would teach them responsibility. Their arguments were thoughtful and convincing, and it was clear they had put genuine effort into their explanations.
Seeing the money fill can be empowering for kids
Setting the Rules
After hearing their perspectives, we decided on a modest yet reasonable amount of pocket money. However, there was one caveat: the money had to be divided into three categories—Give, Save, Spend. This ensured they learned the value of generosity, financial planning, and mindful spending.
For our younger daughters, Hibah and Maariyah, 5 and 4 at the time, the process was more hands-on. We guided them through the same system, helping them understand the importance of each category.
The 3-Jar System
To make the process tangible, we provided each child with three jars. Together, we labeled them Give, Save, and Spend, and the kids were thrilled to decorate their jars with stickers and colors. The physical act of placing money into each jar made the concept more real and engaging.
Each time they received their pocket money, we guided them in distributing it equally among the jars. Over time, they began to understand the purpose of each category:
• Give: To help others in need, fostering empathy and generosity.
• Save: To set aside money for something meaningful in the future.
• Spend: To enjoy their earnings responsibly.
Lessons Learned
Introducing pocket money at a young age has been a rewarding journey, but it has also highlighted unique traits in each child.
• We’ve seen one child struggle to spend money, carefully deliberating every purchase, while another finds it hard to resist spending right away.
• Saving has come naturally to some but required encouragement for others.
• Alhamdulillah, giving in charity has been a strength for all of them, which we attribute to their exposure to us giving regularly.
By allowing them to make their own financial decisions, we’ve given them room to experience consequences and learn discipline. The separation from chores has also reinforced that responsibilities at home are not negotiable, while pocket money is an opportunity to practice financial stewardship.
What We’ve Learned as Parents
As parents in this generation, there’s often a pressure to give our children everything we can afford. We feel the weight of wanting them to have more than we did growing up. But over the years, I’ve realized that just because we can give them everything doesn’t mean we should.
Children need to understand value of money, the effort it takes to earn it, and the importance of using it wisely. This pocket money system has been a simple but effective way to instill these lessons early on. They’ve learned to delay gratification, plan for the future, and appreciate the things they work towards.
Why We’re Glad We Started Early
Starting this journey while they’re young has taught our children essential life skills:
• Financial management: They’re learning to allocate resources wisely.
• Discipline: They understand the importance of prioritizing needs over wants.
• Delayed gratification: They see the value of waiting and saving for bigger goals.
Moving Forward
As parents, we’re grateful for the lessons this experiment has taught us as well. It’s a reminder that children learn best through practical, hands-on experiences. By encouraging financial independence and fostering an early understanding of giving, saving, and spending, we hope to raise responsible, compassionate adults.
Now they’re older, they have bank accounts with their own cards, but still follow a similar method of give, save, spend. It’s allowed them to buy things for themselves that they would have had to otherwise ask us, and this has been very empowering for them.
If you’re considering introducing pocket money to your kids, start small, be consistent, and involve them in the process. You might just be surprised at how much they—and you—will learn along the way.
What’s your approach to teaching kids about money? Share your thoughts in the comments below!
