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Why you should give your kids a regular “PayDay”

February 21, 2024

Read Time: 2 minutes, 464 words

The rise of instant gratification and the power of digital advertising is like a tide that parents are constantly battling against. So, what can we do to help our kids fight back?

Here at Kit, we designed our pocket money Earn functionality with kid’s financial capability at
the heart. As a result, we chose to deliberately create a regular allowance structure, rather
than build jobs that could be paid for ad hoc.

  • Here’s how a regular PayDay could help you build your child’s financial capability:
    Walter Mischel, the psychologist behind the Stanford Marshmallow Experiment,
    conducted research that shows that children who can delay gratification are more
    likely to have higher savings, better credit scores, and lower debt levels in
    adulthood1. Delayed gratification is like a muscle - the more you exercise it, the
    stronger it gets. Having a regular pay structure means children are regularly
    practising waiting and being rewarded at the end.

  • Having a regular PayDay can encourage more frequent conversations about
    money (which are shown to directly build financial capability), by providing a regular
    'moment' where you can share your own money reflections, as well as celebrate what
    your little grownup has earned (or reflect on what was tricky if not). Encouragement
    helps your child build self-efficacy and a positive attitude toward money.

  • A consistent pay structure helps your child to build skills in budgeting (and kids
    learn by doing). A regular source of pocket money means regular decision-making on
    whether to spend or save, and the ability to set savings goals and plans (e.g. save $5
    a week). If they are short of money, they need to wait until the next pay period before
    they have more to spend - and that is a valuable lesson. Younger children can start
    with a weekly schedule, but as they become teenagers, you can extend it to
    fortnightly, and then monthly. Before you know it, they are budgeting larger amounts
    over longer time periods, just like adults.

We know that some parents want to pay children instantly for jobs done around the house.
Kit supports instant payments through PayTo so as the Boss, you can make the right choice
for your family.

Quote


1 Shoda, Y., Mischel, W., & Peake, P. K. (1990). Predicting adolescent cognitive and self-
regulatory competencies from preschool delay of gratification: Identifying diagnostic
conditions. Developmental Psychology, 26(6), 978–986.
https://doi.org/10.1037/0012-1649.26.6.978

Also:Chabris CF, Laibson D, Morris CL, Schuldt JP, Taubinsky D. Individual laboratory-measured
discount rates predict field behavior. J Risk Uncertain. 2008 Dec 1;37(2-3):237-269. doi:
10.1007/s11166-008-9053-x. PMID: 19412359; PMCID: PMC2676104.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2676104/


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