My interview with Kiss 92 FM was quite a blast this morning.
I was asked to talk about pocket money and parenting.
Some readers may be directed to this blog from the Kiss 92 FM Facebook page so I am sharing my research notes for those who want to get more information on what was shared today.
The only question I was not directly prepared for is whether parents should "bribe" their kids to do well in exams. My answer is that external rewards like exam bribes drive out the intrinsic motivation to be curious about the world around us so it not be the best way to motivate a child.
1. How much money is enough for primary school kids?
I took a study by Birdseye/Walls in the UK in 2000, performed currency conversion into SGD and adjusted for 4% inflation.
So the general advice is to give around $2 for kids in primary 1 and steadily increase this to about $5 at primary 6.
2. Is it better to give kids a monthly or daily allowance? Why?
A study conducted in 1991 (Abramovich) tested children on how familiar they are with the prices of common goods. Students who had an allowance scored higher in this experiment. This shows a monthly allowance facilitates monetary competence and is thus preferred as kids learn to plan ahead and save if they want something special like a PS4 console.
3. Should we give our kids a little less or a little more for their allowance? Will this help them to learn about savings better?
The advice from financial literature is always to give less money and more quality time.
However, money plays a big role in economic socialisation and kids as young as primary 2 understand that money comes from hard work. So parents should give more to cultivate savings as early as primary school. Opening a shared bank account can be done around that time.
Interestingly kids in Hong Kong understood how a bank makes profits at 10 which is two years earlier than kids from New Zealand.
4. Should we still be giving money to our kids who are already in Polytechnic?
Based on some infographics on the web, a polytechnic student spends 25 hours on lectures, tutorials and labs a week. This is 5 hours a day on average. Assuming that the student needs about half that time to revise at home, that would be about 7-8 hours a day making part time work not too feasible.
Parents should ideally maintain some financial support with around $250 to $350 a month.
( JC students spend a lot more time studying, so its best that they concentrate on their exams so more support is needed but for a shorter time of 2 years. )