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How to show children the value of their pocket money
Independent financial adviser Simon Gibson has a brilliant idea for using pocket money to teach children some valuable lessons.
by Michelle McGagh on Apr 13, 2012 at 00:01
One of the great things about being a journalist is that people sometimes tell you things you aren't expecting!
We were discussing how it's all very well thinking about how you could, in theory, set your children up for life by contributing into a pension for them. But even if you can afford to do it, is there a danger in making things too easy for the young 'uns?
That's when Gibson mentioned his brilliant idea for pocket money.
Gibson believes that teaching children the value of money before handing over any sum of money will give them ‘wealth in terms of knowledge and financially’.
Four pots system
To do this, Gibson uses a ‘four pots’ system, which he has used with his own children, now aged 12, eight and five.
Gibson gives his children pocket money each Saturday: they are given £1 for every year of their age. The children then put the money into the four pots.
Pot 1: Charity
10% of every pound is put in the charity pot, which can be ‘spent at the local fete, put in the charity collector’s box or given directly to a charity’.
‘This shows children that there are people worse off than them,’ Gibson said.
Pot 2: Spending money
Another 30% of each pound is spending money, ‘which they can spend on anything they want, such as sweets and magazines’.
Gibson said his youngest child now realises he has to save for two weeks in order to get the magazine that he wants.
Pot 3: Something special
The next 30% of each pound goes towards saving for something special. Every six months Gibson allows the children to take the money in this pot to buy something that they really want.
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