Ask Paul: My daughter is hopeless at saving her pocket money


Dear Paul,

I have a question about teaching good money management to kids.

My husband and l are both good with our money - we pay our bills, live reasonably comfortably while putting money away for family holidays.

ask paul clitheroe my daughter is hopeless at saving her pocket money

My daughter, however, cannot save her pocket money - it is spent the instant it hits her hand.

We have implemented, "spend", "bank" and "give" money boxes to try to promote good financial habits, but even the "spend" never accumulates.

Each week she already knows what she is going to buy before she's even earned her allowance. Please help. - Belinda

This is an incredibly frustrating issue for parents, Belinda, and one I have been discussing and writing about for 40 years.

Before you tear out your hair, I reckon you are doing all the right things to get the long-term money behaviour you are seeking for your daughter.

What always alarms me is parents who show poor behaviour with money. Kids watch everything we do. Long-term money habits come from the home, and your behaviour with money will eventually influence your daughter's habits.

Families who do manage finances responsibly give their kids every chance of having good money habits.

You are both good with money. I am sure you discuss this with your daughter. Frankly, I think all these things, with your daughter earning her allowance, is a good model.

What did make me laugh is that she pre-plans how to spend it. This is actually a good habit. You could try telling her that if she has a longer-term purchase in mind, for each dollar she saves towards that goal in an agreed period, you will match her dollar for dollar.

But my view is that you are already setting her up to be good with money.

My sister has a gorgeous younger daughter who was absolutely hopeless with money until about age 20. Since then all the great habits demonstrated by my sister and her husband, and training with pocket money are now front of mind for our niece.

She is a fantastic budgeter and saver, and now owns an apartment. Exactly what happens in young brains to bring about this switch I have absolutely no idea. But I reckon you are doing pretty much all you can. Let it take its course.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.