Israeli Parents Teach Kids Financial Literacy Through Pocket Money

Most Israeli children begin receiving pocket money around ages 6-7, typically in first or second grade, when they can count and understand basic monetary value. This allowance is primarily intended to teach financial decision-making rather than simply provide funds. Weekly allowances are common for younger children, as monthly sums can be too long to manage, while older children, around ages 11-12, transition to monthly stipends to practice longer-term budgeting.

There is no legal requirement for the amount of pocket money given, with amounts varying by family. However, common ranges in Israel suggest 10-15 shekels weekly for ages 6-7, 15-30 shekels weekly for ages 8-9, 80-150 shekels monthly for ages 10-12, and 100-200 shekels monthly for ages 13-15. A survey of 500 Israeli families indicated that most parents of children aged 6-11 give up to 100 shekels per month, or about 25 shekels weekly. Roughly one-third of families do not provide regular pocket money, instead purchasing necessities for their children. Cash is the preferred method of payment for 85% of parents, as bank cards are typically issued around age 14.

Parents may adjust allowances annually, often on birthdays or the start of the school year, with small increases. The article outlines three main approaches to distributing pocket money: a fixed amount given regularly regardless of behavior, payment for specific chores, or a combination of both. The fixed allowance method emphasizes money management as a lesson separate from behavior, while chore-based allowances teach the connection between work and earning. The combined approach offers a base amount plus extra for additional tasks.

Parents are advised to establish clear agreements with their children regarding the amount, frequency, and spending guidelines. A popular method involves using three jars labeled 'Spend,' 'Save,' and 'Give,' encouraging children to allocate their allowance across these categories. Approximately half of the money is designated for immediate spending, 40% for savings towards larger goals, and 10% for charitable giving or gifts. Additionally, the Israeli government deposits a sum into a savings account for each child, accessible at age 18.

The article stresses the importance of allowing children to experience the consequences of their financial decisions, such as running out of money before the next allowance. It cautions parents against common pitfalls like imposing fines, allowing advances, borrowing from a child's funds, or comparing siblings' allowances, suggesting that learning from small financial mistakes in childhood is more beneficial than larger ones in adulthood.