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Created on 05.02.2019

Learning to manage money: budgeting for children and young people

Raising children also involves dealing with new challenges and issues on a daily basis. As the kids get older, the subject of money is bound to arise sooner or later. How do you teach your children the value of money? And how can they learn to handle it responsibly? In this article, we’ll tackle this topic and give you a few practical tips on pocket money.

Your child is staring at you wide-eyed, one finger pointing at the new portable games console being advertised at your local supermarket. Whether it’s a gadget – such as a boombox or hoverboard – or something simple like a bag of sweets, it’s not always easy to say no when your son or daughter is looking at you with big puppy dog eyes. But the family budget and your own parenting ideas generally mean you can’t always say yes, and that’s perfectly OK. So what is the best way of teaching your children to manage their money?

Be a good role model: prepare a budget

Start by setting an example: try to be good at managing your own finances. After all, dry as it sounds, there is no denying the fact that children do cost a bit of money. This is why parents need to plan their budget well. On average, you should expect to spend between CHF 300 and CHF 400 per month on your son or daughter when they are babies. The older they get, the more costs are added. Find out more in our article “This is how much a child really costs in Switzerland”.

Pocket money: yes or no?

If your child has reached a certain age, you have no doubt already thought about the subject of pocket money. You aren’t legally bound to give your son or daughter pocket money. But one thing’s for sure: your children will really benefit from learning how to manage their own money. That’s why a number of Swiss associations recommend regular pocket money, including The link will open in a new window Pro Juventute (in German). This will teach your children to plan, to do without things and to save, or perhaps even to treat themselves. Children can only have these experiences, see the consequences and learn valuable lessons if they have their own money.

How much pocket money is appropriate at what age?

“All the other kids get more than me!” How much pocket money children are given is often a sticking point at the dinner table in Switzerland. The link will open in a new window The Swiss Budget Advice Association has a pocket money table (in German) that may be a helpful guide. The recommendation is pocket money of one franc a week when your children start their first year of school. Each year, you increase this by one franc per week. When children turn ten, the recommendation is to give them pocket money on a monthly basis, and possibly even give them a bigger amount.

Age in years Amount
Age in years
6+ (1st school year)
Amount
CHF 1 per week
Age in years
7+ (2nd school year)
Amount
CHF 2 per week
Age in years
8+ (3rd school year)
Amount
CHF 3 per week
Age in years
9+ (4th school year)
Amount
CHF 4 per week
Age in years
10 to 11 (5th–6th school years)
Amount
CHF 25 to CHF 30 per month
Age in years
12 to 14 (upper school)
Amount
CHF 30 to CHF 50 per month
Age in years
15+
Amount
CHF 50 to CHF 80 per month

This introduces your children to the value of money during their first years of school and teaches them about the world of mathematics at the same time. They can treat themselves to little things with their pocket money, but they also learn how to do without things every now and again. It can also help to take your son or daughter shopping with you so they can have a look at your shopping list. Talk about why you’re buying things or deliberately choosing not to buy them.

These tips will help make pocket money useful

Besides the amount of pocket money you give, there are other important factors to bear in mind. Here are some tips to help ensure that pocket money contributes to your children’s financial education.

Tip 1: Don’t base pocket money on achievements

Avoid using pocket money to put pressure on your children or to punish them. For instance, pocket money should have nothing to do with how well your children are doing in school. According to experts, this is not a good educational method. Conversely, there is also no need to give your children a bit extra every time they help out around the house.

Tip 2: Agree on how the money should be spent

Are they allowed to buy their favourite magazine or sweets from the kiosk? Talk to your children about how they should spend their pocket money. Generally speaking, it will be used for “personal things” and “treats”. 

Tip 3: Give your children their pocket money on time

Be a good role model and give your children their pocket money on the right day and at the agreed time, without them having to ask you. The amount should be enough for what they want to buy and should last until you next give them money.

Tip 4: Don’t give your children any of their pocket money early

“Dad, I want to buy the new game! Could you give me CHF 10 now?” It is not easy to escape endless consumerism in this day and age. We are all too quick to dip into our wallets and purses to give our children money. Stay consistent and avoid giving your children any pocket money early. Don’t give into temptation. Instead, suggest they try to supplement their pocket money in other ways and save up if they want to buy more expensive things. Your son or daughter could well earn enough with a holiday job or by offering to do tougher chores around the house (e.g. cleaning the windows).

Tip 5: Create a budget together

Avoid using pocket money to put pressure on your children or to punish them. For instance, pocket money should have nothing to do with how well your children are doing in school. According to experts, this is not a good educational method. Conversely, there is also no need to give your children a bit extra every time they help out around the house.

Tip 6: Encourage your children to be responsible – even if they buy things they regret

“You don’t need that!” is an invitation to your child to go ahead and buy something anyway. Do they really need this plastic toy that’s just going to end up broken in a week’s time? It may be a good idea to let your son or daughter make their own decision. After all, it is only when we regret actually buying something that we learn our lesson.

Tip 7: Avoid additional financial boosts

As parents, you are first and foremost role models for your children. If you pay your bills on time and show your children the importance of doing so, the risk of your children running into debt as teenagers will be lower. If your son or daughter is unable to pay a bill at some point, though, you shouldn’t simply give them the extra cash. Put your heads together to help them figure out how to pay off the debt, and view this an important experience for when they are adults.

Encouraging your kids to be responsible with their own money pays off

Kids and young people face the challenge of trying to resist the allures of our consumer society. Of course, there is no doubt they would love the latest trainers or smartphone, or perhaps some really cool make-up. Parents have a tough job, and dealing with their own finances is part and parcel of their responsibilities. Start talking to your child about the subject of money at an early stage, and make it a day-to-day topic. Our tips will help you teach your children how to be sensible with money, a lesson they will one day be grateful for. The PostFinance “The link will open in a new window MoneyFit initiative” supports parents and teachers in promoting the financial skills of children and young people.

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