Along with the pain of making my annual budget fit, the other January pressure is negotiating the annual pocket money increase. My children are six and eight years old, and it’s the first time it’s occurred to them to ask for a pocket money increase – the sweet years are gone, and now they negotiate hardball!
We have some pocket money principles:
It must be split into thirds and allocated to: the charity jar, savings (they have the cutest piggy banks) and spending – wisely of course! (See my blog post on my children and their relationship to money). This approach is influenced by a great book every parent should read, The Opposite of Spoilt, by Ron Lieber, which is intended to help build a healthy, sharing and happy attitude to money.
This worked well for the first few years when they each got R15 every second week and split it into three groups of R5. Then a year ago, I increased pocket money to R20, which doesn’t split neatly into three. (Not to mention the hassle of trying to have the right change – three piles of R6,66 for each kid! So, we got a bit lazy and went with splitting it: R5, R5 and R10 (the larger went into the spend pile!).
Late last year, my son started asking about a possible pocket money increase and the discussion got interesting. I suggested he think of a good motivation; he went away, consulted his uncle and came back to tell me his insights: “There are more poor people, so he needed more money to help them” and “Everything costs more so he needed more spending money.” Both are pretty good arguments for a pocket money increase.
Having agreed in principle to a pocket money increase, the question became: How much? We wanted to do the three-way split again, but also recognised that it would be nice for them to have a little more to spend (the inflation point). The problem was to go back to the three-way split and give each third an increase to R33. This is a big increase, and would soon become unmanageable as each year sees another increase. I was wary of not leading up with budget-breaking increases within a few years.
So, finally we settled on a re-jig to the principle (sorry to Ron Lieber, whose idea we still cherish) and we increased their pocket money to R24 and split it 50% to spend, 25% each to savings and charity. Well, at least everyone got a small increase!