It’s every parent’s dream to see their children succeed in life and sometimes that means helping them along the way. But how much help should children get? They need enough to give them a good start, but not so much that they become dependent on parents to get by.
One of the greatest gifts you can give children is the ability to manage their money effectively. Teaching them basic money management skills starts before they go to school by giving them their own money each week. Deciding how much money to give as pocket money is easy. Just work out what choices you want your child to be responsible for and give them enough money to make those choices. Early in life, choices will be around simple things like buying toys and ice creams. By the time they leave school, children should be able to confidently making choices about spending now or saving to spend later, and about budgeting for personal expenditure such as clothes, phone, transport and entertainment. Their pocket money should be enough to cover these expenses to a basic level, supplemented by earned income.
Helping your children with the costs of further education makes sense only to the extent that interest free student loans do not cover the costs. From a financial point of view, it is better to contribute to the deposit on their first home than to pay off interest free debt. Setting aside money to invest for your children’s future is not necessarily the best use of money if you still have a mortgage. Instead, concentrate on reducing your mortgage as quickly as possible so you are in the best position to help your kids financially at the time when they most need it. This is likely to be when they themselves have young families.