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Family & Friends


by Rachel Fernandes

Every kid these days demands a fixed pocket money from his/her parents. And often parents relent. However, giving your kids a regular allowance or pocket money is a very healthy habit as it encourages finance management and makes them aware of the value of money from an early age. Consider these five factors while planning your kids allowance and you will not regret your decision...

1. When
Kids should understand the concept of money before they start receiving money. They need to know that money works as an exchange for goods. Generally, a good age to Start pocket money for your kids is around 8-10 years. However, this may be best decided by the parents themselves keeping the maturity level of the child in mind.

2. Why
Pocket money teaches kids how to manage their expenses within a limited budget and makes them responsible in their spending habits. They also learn to prioritize and save money for things that they actually want.

3. How much
It's best not to be too stingy or too liberal with your kids' allowance. Calculate the expenses of your kids and give them a little over that for their personal expenses. It is best to sit down with your child and list what all the allowance will and won't include, and accordingly decide the amount.

4. Ways to give
The allowance should be given in a way in which it is easy for them to manage. One of the ways of doing so is making them keep the money in glass jars where they can see it growing. At the start, it is better to give them a weekly allowance and then gradually as they grow older, you can give it monthly. You can also give your child money in envelopes and each envelope could be tagged with the different purposes the money is to be used for. For example, there could be a savings envelope, a spending envelope etc.

5. Expectations
Parents generally expect kids to do chores in order to get their pocket money. Though, this would teach them that they have to work for what they want, you do not want your kids to be asking for money every time you ask them to do chores, so work out an understanding with them as to which tasks will get them extra allowance and why. Don't attach rewards to every good deed they do as this may make them calculative and money minded.

Once you start their pocket money, be committed towards it. Try and give it on time and do not threaten to withdraw it each time your kid misbehaves. View it as a tool to teach your kids the importance and management of money, as these qualities would last them for a lifetime. After all, it's not always all about the money!



The next time your teenage kids demand for an increased pocket-money, urge them to earn it themselves by doing small jobs that will not only give them money but also make them responsible and independent. It will also teach them a very important lesson- the lesson of valuing and respecting money. Here are a few innovative ideas to help them get started.

1. Teaching computers and English
Most students learn computers and languages in school and college and quite a few of them are very good at it. Utilizing this knowledge base, they can teach computers or English to senior citizens, homemakers or other students. These teaching sessions will not only help them earn money but will also enable them to revise their skills.

2. Getting creative with crafts
If your child is good at arts and crafts, encourage him/her to teach these skills to younger kids. Neighbourhood kids will be more than keen to learn these interesting hobbies during their vacations. At the end of these classes, encourage them to have a sale and sell the items that have been made. This can be encouraging and can lead students to explore their hidden talents.

3. Walking the dog
Dog walking or pet watching is an easy and effective way for students to earn some extra pocket money. Many pet owners do not have time to walk their dogs during the day and hence are willing to pay for their pets to be walked. Students can be paid on per hour basis and if they also enjoy working with pets, this will be a rather enjoyable task for them.

4. Baby sitting
Students can baby sit young children/babies of their neighbours or family friends and earn some pocket money in exchange. Teenage girls are likely to enjoy this option. But, while allowing your teenage child to take this up, ensure that she knows all that there is to know about taking care of a baby. Baby sitting a very young baby is best avoided.

5. Summer jobs
If your kids are over 15 and mature enough to handle a job, encourage them to take up a summer job in the field of their interest. For instance, your child can assist a photographer, designer, documentary film maker and so on, to learn the basic skills required for these careers. This will also help them in judging whether they have the required attitude and aptitude for the domain or not, hence aiding them in making a career choice.

Push your children towards utilizing these ideas or brainstorm with them to come up with alternative solutions for earning their pocket money. You will be surprised at the positive outcome of this experiment!


Arguments over money within the family aren’t uncommon. Here are some ways to avoid them: share your financial situation with your partner or any dependent/co-dependent member in the family. Your partner might feel that you are over-spending or under-spending because he/she does not know what your financial situation is. So give your spouse a complete run up on your income, personal expenses, bank balance, investments, debt positions, etc. If you really are overspending, this will only help you get a reality check. And if demands are unmet, your partner will now know exactly why. So don’t shy away from sharing negative or positive situations. Don’t worry that he/she might overspend or start worrying too much. Instead, you will have a healthy home environment in which to plan your expenses in and help each other out.


A thumb rule when you lend money is to lend only what you can absolutely spare. More often than not, the borrower is not one who is very careful with his or her own money. There is therefore little chance that he or she will be in a position to comfortably return it back when promised. Since people who borrow can include friends and family, such unmet financial transactions often lead to a lot of bad blood.

Lastly, if you do lend, try to ensure that you are repaid in monthly instalments. If you do want to charge an interest, charge not more than what you will earn in a savings bank account. When you lend money at high interest rates, you put a lot of burden on someone who is already in a financial crisis. At a healthy interest rate and through a monthly instalment payback option you will help the borrower comfortably return your money and at the same time safeguard your own interest.


Be careful about extending personal guarantees to your friends, colleagues, or relatives. Here’s why:

• Extending a guarantee is as good as giving loan. So take all the precautions, as you may take while extending the loan.

• In the case of a loan, you may write off the loan, if things go bad but in the case of guarantees, the lender may invoke your guarantee and demand payment from you.

• In case the person to whom you have given guarantee is unable to pay, you may be forced to pay on your guarantee.

• While it is legally possible to recover the money from the person to whom you have given the guarantee, it is very difficult to actually recover the money from the person to whom you have given the guarantee.


Most financial instruments like fixed deposits, shares and debentures and of course insurance policies offer a nomination facility. Nomination allows the nominee to claim proceeds of the financial instrument in the event of the investor’s death, without having to provide evidence. In most instances it is the immediate family which gets nominated to avail of the benefits. In most instances, one has an option of changing nominee depending upon circumstances. Check your portfolio. Have you nominated your near and dear for your investments? Please do, so that the distribution of your assets is done as per your wishes should you not get the chance to do it yourself.
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