Sunday, 28 February 2010

Fiscal Studies for Five Year Olds

When I was a little girl my mum gave me pocket money and taught me about the value of money (she had worked in a bank before getting married). She taught me about saving for things I wanted (and thinking if I really did want them in the process), about loans (to be paid back to her with interest) if I couldn't wait (I soon learned I didn't like loans!), budgeting when I went to university and saving for a rainy day.

I've always been really grateful for it and am sure her financial teaching has contributed to my living within my means and being debt free (I still can't bear the thought of taking out a loan and paying interest!). For a child of Thatcher, I didn't have the "I want it, I deserve it" mentality that has led so many of my generation into severe debt.

So I thought it would be prudent to do the same with daughter.

For the last year or so she has had some 'pocket money' each week which she puts in her money box. At first she just liked having it, playing with it, counting out how many coins she had.

Over the last few months she has realised that she can use it to buy things.

When we go out, if she asks for something like a toy or magazine I just say "Have you enough pocket money?" and if she has, she can have it. (Pocket money is great for stopping the mithering)

Like my mum, I thought I would not censor what she wants to buy, she can choose what she wants (she also needs to learn about "buyer's remorse"!)

Last week we went to Toys R Us where she wanted a rather expensive pony and rider toy. She had just enough pocket money, so she got it.

That night I found her crying in bed.

"What's the matter?" I asked.

"I haven't got any pocket money left", she wailed, "I can't buy any more toys"

I have to admit that at this point I was thinking, "Yes! She's learned there isn't a never ending pot"

"Well, you have to save up again" I explained and left it at that.

This weekend her second tooth fell out and the tooth fairy came.

This morning she said, "Mummy, I've got lots of money now"

"Yes lovey, that's called a windfall"


Heather said...

Pocket money is such a good way to teach them about money responsibility isn't it?

I hope to have the same 'it's your money spend it on what you like' attitude when they get to that age...

Alcoholic Daze (ADDY) said...

I think you are quite right to teach her to be careful with money - you have the same philosophy as me! Only one fly in the ointment - she'll be yanking all her teeth out now!!! LOL.

Iota said...

I think you have the right approach. I'm trying to do the same with my kids, and their attitudes to money are SO different. One is a natural saver. The other a natural spender. So interesting to see them work it all out.

Anonymous said...

That's called cute! I'm trying with Amy, who gets pocket money too, but it's not that easy!!

CJ xx

Working Mum said...

Heather - yep, it's a bit difficult seeing her spend on things I think are overpriced, but it's her money and I think she's learning.

Addy - It had occurred to me that she might try that!

Iota - we all have different money personalities, that's why I do the finances in this house, not husband!

Crystal Jigsaw - keep trying, I'm sure she'll get a lot out of learning about money.

1 husband, 2 kids (and lots of books) said...

She seems to have caught on a bit quicker than my son. I'm also trying to link his weekly spends to him making a bed each morning - which one depends on where we are / how much time we have. Whilst he's caught on to the earning money bit with great enthusiasm he a. finds it really, really hard to save money for any time at all and b. always choose the most inappropriate thing. Unfortunately his buyer's remorse is yet to kick in too, but we'll keep going... I agree with you that it's important to let them learn these lessons themselves. Hopefully he'll crack it before we disappear under a mound of cars / soldiers / soldiers in cars from Poundland.

Muddling Along Mummy said...

I love that idea (especially the interest !) - I'm keen that my girls learn about money, Mr didn't have to work for his pocket money & always got treated well by his parents and its made him much less aware of the value of it

Working Mum said...

1 husband, 2 kids - Izzy hasn't learned about saving yet, she's only just run out of money, but I'm hoping she learn about it in time. So hoping she won't just be a spendaholic!

Muddling Along Mummy - At the moment Izzy just gets given pocket money, but I have linked it to her 'being helpful' by tidying her room or laying the table so that she knows she has to do her part to get it. Later I'll link it to earningore by doing chores and when she's a teenager we'll introduce a clothing allowance to save all the mithering over clothes. I just hope it all works!

Kelloggsville said...

is she wiggling the others as much as possible?!!!

My daughter gets pocket money calculated based on a priced up list of weekly achievements and also has to buy her own 'wants' - usually DS games now not toys. But the earn/save/buy is sinking in and she thinks very hard before spending!

Ladybird World Mother said...

Such a good lesson, even knowing about windfalls!!

Working Mum said...

Kelloggsville - what a sensible mum you are. I'm sure she will thank you for it in the future.

Ladybird World Mother - yes, windfalls are part of life as well. You never know what's round the corner.

scrappysue said...

kids and money. sometimes i think they'll never learn, but a hard lesson occasionally helps!