Pocket money has and always will be a contentious issue with parents.
While some parents believe pocket money should be earned with chores around the house, others think the practice is ridiculous.
But according to the Barefoot Investor, parents should give their children pocket money on just one condition – that they work for it.
The author also shared that children are struggling to understand the practice of earning and saving money as they are not handling physical cash.
Pape’s theory, which involves using three jam jars, aims to teach kids the link between working and earning money.
He recommends creating a spend jar, a give jar and a smile jar, so children can physically see where their money is going.
“It’s more important now with money becoming invisible so for me using jam jars makes sense,” he told news.com.au.
“They want to see the money and have a direct link between work and the money piling up.”
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Pape has also previously spoken to Mamamia about the importance of teaching your teenagers about financial independence.
The author insists that once children reach the age of 15, parents should force teens into a job.
Pape is is adamant that working is the only way teenagers can begin to truly appreciate money and learn first-hand about financial fundamentals such as budgeting and superannuation.
“No matter what school they’re at, you are not getting a great education if your teenager isn’t flipping burgers somewhere for the minimum wage,” said Pape.
Pape also believes in ‘The school of hard knocks’ as an integral part of a child’s education. He explained that financial entitlement breeds financial laziness, which doesn’t bode well for the inevitable time when the ‘bank of mum and dad’ closes its doors.
Pape naturally isn’t advocating full-time work, but just enough hours so that the basic principles of money can be instilled.
“They will make mistakes and that’s good. You want them to make mistakes when they are 15, not 35. It’s a really wonderful way for young people, still in the safe confines of the family home, to get a dose of the real world.”
Scott Pape’s new book, The Barefoot Investor for Families: The Only Kids Money Guide You’ll Ever Need is in bookstores from today.
What do you think? Do you give your kids pocket money?