Pocket Money

Parents might have different views on whether or not to give pocket money to their young kids. The reasons behind our decision to go for it were:

• we knew our four year old son will use the collected money well (our son loves LEGO, and the only thing he asks for are new LEGO sets)
• he has already started to understand the concept that when you have money you can exchange it for various things (he understood money has special value)
• we wanted our son to practise counting in a real situation (in order to know how much he can spend he first needs to know how much he has saved)
• we didn't want to offer him money in exchange for his work (eg. completing chores) but decided to explain to him the concept that money can be earned, too, in case he asks for an increase in pocket money in the future.
• the amount being given was chosen by us so that getting to his saving aim did not seam to be an endless journey
• we decided to give the pocket money daily, so that we could provide frequent opportunity for counting.

Our son has quickly realised that he needed a way of keeping track on which days he has already received his pocket money. He decided to use his wall calendar for that. By marking the days he has helped us to make the track on the giving pocket money process.
Additional benefit: familiarisation with the calendar year structure.

Counting money for 4 years old seemed difficult at first. But we advised him that he could get some help from a calculator. Working with a calculator is still his favourite way of doing the sums.
Additional benefit: familiarisation with counting devices.

Our son has developed preference of not having too much separate notes or coins in his savings (so that the process of counting the entire savings is quicker). He often asks us to exchange his lower denominations for higher denomination notes.
Additional benefit: developing a sense for exchange of units.

As our son has dealt with money almost daily, he was able to learn very quickly the "money time tables", eg. five 20Kc go into one 100Kc note, ten 100Kc notes go into one 1,000Kc note, etc.. (we are lining in Prague, in Czech Republic,and we use Czech crowns here).
Additional benefit: learning in natural way the time tables (or at least its parts).

As counting the money itself has stopped to be difficult for our son, we decided to upgrade the process. We decided to give out different amounts of daily pocket money, the amount depending on the total amount of the money saved by our son. The more he has in his bank, the higher his daily amount of pocket money is. Our son worked with us to develop a table with different thresholds of the money in his bank, and corresponding daily money amounts.
Additional benefits: familiarisation with a saving account principle. The more money you have saved in the bank, the higher the interest payments you receive.

The natural step now for the pocket money process will be an upgrade to a percentage interest rate structure. However, in order to do that we must make sure that our son:
- is familiar with percentages principle
- is able to use his calculator to work out the percentage of a given sum
- get familiar with rounding up the numbers

Once we introduce the improved structure, I will update our pocket money story for you.