The bank’s investigation revealed how much pocket money parents give to children this year | Business

“First of all, it is necessary for every child to ensure that he regularly eats quality food – at home, in the school canteen or cafeteria. Secondly, it is worth separating the money for food from the funds that the child can spend at his own discretion to satisfy his desires. When a child uses a payment card, it is most convenient to track and manage these expenses with the help of a smart app. The monthly expenses spreadsheet usually shows certain inclinations of the child and savings opportunities,” says Sigita Strockytė-Varnė, SEB bank’s personal finance expert.

SEB bank photo/Sigita Strockytė-Varnė

Slightly more than half (56%) of parents said that they separate the pocket money given to their child from the money allocated for food at school.

The number of parents giving 21-40 euros per month has increased

During a recent survey, it became clear that almost a third (32%) of parents in Lithuania spend an amount of 21-40 euros per child per month. Last year, this amount was allocated by a smaller part of the respondents – a quarter. Compared to last year, the share of parents who give their child up to 20 euros per month for food and other needs has slightly decreased, while the share of those who spend 41-80 euros has remained the same.

S. Strockytė-Varnė notices that most parents begin to allocate pocket money to their children after they start attending school. In her opinion, regular pocket money promotes children’s independence, decision-making and rational thinking skills. According to the expert, a 7-year-old child is already fully ready to have his first card and pay with it.

A simple rule helps to determine the amount of pocket money

According to SEB research, currently more than half (54%) of parents transfer their pocket money to a bank account or card. 72 percent tend to give net children’s expenses. Consequently, some parents use both methods.

The personal finance expert notes that children learn to use smart technologies very quickly and can apply their skills by managing their finances with an app. Parents also gain convenience, as they can, for example, set a regular pocket money payment every week.

“To determine the amount of pocket money, it is recommended to follow this rule: one year of a child can correspond to between 0.5 and 1 euro per week. So, if a child is seven years old, his pocket money could reach from 3.5 to 7 euros per week, and for a 15-year-old teenager, it could be allocated from 7.5 to 15 euros per week”, shares S. Strockytė-Varnė. However, according to her, the family’s financial capabilities are much more important than the rules – pocket money should not be an additional, burdensome expense. The model that works best is when the child starts to pay for goods or services with his own pocket money for which his parents used to pay, for example, when he suddenly buys another portion of ice cream or jumps on a trampoline during a city festival.

According to the expert, as the child grows, the amount of pocket money should also increase, while giving him the opportunity to make more financial decisions himself: “If elementary school children can buy small snacks or toys for themselves with pocket money, then the older ones should already learn to save so that they can buy, for example, the phone or another more expensive purchase. In the long run, this teaches the child to decide which desires he or she will fulfill first with his or her money, or pursue long-term goals through saving.”

Recommends leaving room for mistakes and lessons

According to S. Strockytė-Varnė, if the parents decide to give pocket money to the child, it is worth talking and agreeing on who exactly this money can be spent on. First of all, she recommends that the rules include restrictions on what can’t be bought because it doesn’t match the family’s values ​​or could harm the child.

On the other hand, according to the interviewee, it is also important to allow the child to make mistakes – not to control or reprimand him for his choices. For example, if the child spent all the monthly pocket money on computer games, but this activity was not prohibited by agreement, then the child has the right to spend the money in this way.

“A maturing person needs to feel that pocket money is his money – his decisions. As a result, teenagers can be gradually given more and more responsibilities, increasing the amount of pocket money accordingly. An older student can pay the club’s expenses, buy clothes, etc. It is important to monitor whether the child is ready and willing to make such decisions, which is best understood during regular conversations when discussing financial habits and behavior,” says S. Strockytė-Varnė, SEB bank’s personal finance expert.

She also points out that it is very important not to save the offspring when the pocket money runs out. In this way, the child is taught planning, patience and a responsible approach to managing his personal finances.