Pocket money - What parents should pay attention to

Promoting independence and financial responsibility are essential aspects of raising a child. This guide provides everything you need to know about pocket money. From the right times to start giving it, to recommendations from the youth welfare office and helpful resources like books and podcasts - we offer you a comprehensive overview.

Pocket money is more than just a small amount of money parents give their children. It offers an opportunity to teach important lessons about money management early on. The importance of pocket money and financial education in young years cannot be overstated. By learning to manage money, create budgets, and set savings goals early, children lay the foundation for financial competence in adulthood. This knowledge helps them make informed financial decisions in the future and protects them from debt and financial problems. Therefore, it is crucial to view pocket money not just as financial support, but as a valuable educational opportunity that parents can provide their children.

Many different aspects need to be considered when giving pocket money. The financial status of the parents, the child’s development, and educational concepts all play a significant role. Below, we have compiled the most important aspects for you.

Establish clear rules, agreements, and boundaries from the beginning. Discuss what the pocket money can be used for and what is not allowed. This helps to avoid misunderstandings and disappointments on both sides. Setting rules and agreements also offers the opportunity to strengthen communication between parents and children. If your child has questions about the rules or needs an exception, you can discuss it and find solutions together. Apps and children’s credit cards can also be a great help in managing pocket money.

When setting rules for pocket money, you have the opportunity to convey your own values and principles regarding money management. For example, you can explain why saving is important or how to handle money responsibly. Children often emulate their parents' handling of money - so be a good role model.

Use pocket money as an opportunity to talk about financial education. Explain to your child how bank accounts work, how interest works, and how to create a budget. There are numerous books and podcasts on this topic that can assist you with this challenging task. Here we have compiled some for you.

Additionally, giving pocket money is a good way to familiarize children with money management. Let your child take responsibility for their pocket money. If they spend it, they should understand the consequences of their actions.

Children need clear structures and rules. Giving pocket money is no exception. Provide pocket money at a fixed time, e.g., weekly or monthly. This helps children understand how to manage regular income and gives them the opportunity to plan better.

There are no strict rules or uniform recommendations for the ideal age at which children should receive pocket money. The decision depends on various factors, including the individual development of the child, the family’s financial situation, and the parents' educational philosophy.

However, on the official website of the Federal Ministry for Family Affairs, there is a practical table that provides an overview of the amount of pocket money relative to the child's age. It is based on recommendations from the German Youth Institute. You can find more on this topic here.

The topic of pocket money presents many parents with a challenge, as there are so many different aspects to consider, requiring pedagogical competence. Fortunately, there are now numerous guides that inform parents about the topic of pocket money, ranging from books to podcasts.

Books on the subject of pocket money are recommended if parents want to prepare thoroughly for their child’s financial education. There are now numerous publications on this topic. They range from scientific books written for guardians to children's books that aim to introduce children to the topic in a playful and simple manner.