‘The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind’. The famous artist Gertrude Stein quoted, "Money is always there but the pockets change; it is not in the same pockets after a change and that is all there is to say about money." The sooner the children of the current and next generations understand this idea, the more frugal they will become. This will lead to a more sustainable and frugal world - a wish of the Father of our nation, Mahatma Gandhi.
There are broadly two schools of thought when it comes to parents or relatives giving pocket money to children starting from a tender age. One group thinks that giving pocket money at a tender age may spoil the children as they are not mature enough to manage their own money. The other school believes that children ought to be given pocket money from a tender age because this act will make the children inculcate certain important values and make them gain knowledge of money management which will come in handy when the children grow up. While the first school of thought does not place trust in their children or wards, the latter not only trust their children but also trust their own ability to monitor the children's expenses and intervene if required. Values like frugality, thoughtfulness, rational thinking are inculcated outside the home. When children manage pocket money, these values will be enhanced. It will also give them wisdom, something that comes only with experience.
We see people managing money in different ways. One set of people tends to spend money as soon as they receive their salary on luxuries or household necessities. The other set of people are the ones who invest a part of their income as soon as they receive it and decide how much they are going to spend that month, leaving the remainder of their income for savings and charity. The latter is always the best way to manage money. Pocket money can teach children the effects of inflation, the importance of investments, the wisdom in savings and the satisfaction of managing money well. In the modern era, in a globalized world, there is a strong need for the younger generations to learn things faster, to be more sustainable and frugal than earlier generations. The act of giving small amounts of pocket money at regular intervals, adjusted for inflation on a yearly basis will go a long way. Giving pocket money has a lot of advantages. Learning to manage money is an essential life skill. By giving a child pocket money, it also gives them financial independence. He/she is now able to buy necessary things, such as notebooks, materials for projects and also to spend, occasionally on other things (ice creams, chocolates). The parents can also regulate the amount of money they give to the child, and also give incentives based on behaviour etc., Thus the child not only learns to spend money judiciously, but it also improves their character and performance.
BE, BMSCE, Bangalore
Shubham is currently pursuing a BE in IT and will graduate in 2022. Loves to learn and help others anytime anywhere. Believes in focussing on good things around.