Any economy, any Country, any Company, even an NGO or the smallest company need resources to achieve its objectives; but it is a known fact that the resources are always limited, and need to be used optimally. This is the reason why even the developed and resourceful countries also prepare a budget for the optimal use of resources. Similarly, every person also has his own budget for his personal expenses or for the expenses of his family.
Usually, it has been seen that a person starts budgeting after he starts earning; till that time his parents provide him with everything he needs (depending on the budget of the family). Because of this, he fails to understand the importance or the value of money and cannot prioritise his necessities and luxuries immediately as he starts earning and soon realises the Hindi saying that 'Aish to Baap ke Paise se Hoti Hai, Khud ke Paison se to Sirf Zarooratain Poori Hoti Hai'. But this could be avoided, if they are put into the habit of planned and prioritized expenditure at their tender age; it would not only help them to cut down few of the unnecessary expenses but also make them realise the value of their parents' and in coming times their own hard earned money.
Developing the habit of pocket money at a very young age thus will play an important role in person's development and will develop different management, financial and strategical skills in them. Quite possibly, this might help them and the whole economy of which he is a part to develop good resource management and to flourish even with meagre resources.
But having access to money at such an immature age may, at first, tempt the kid to spend on his cravings; this might lead to constant demand of increment and on refusal, probably to the theft. So, along with giving a free hand, some restrictions or specifically a check should be maintained. A kid should be taught and encouraged to keep an account of his expenditures; and rather than constantly nagging him, the habit of self-analysis should be developed. This habit of self-analysis might let him learn from his own mistakes and take better decisions in future.
Pocket money might help them realise the importance of available resources and its optimal use but not the importance of hard work; so, instead of simply giving away the money, they should be asked to do some simple works such as washing car, cleaning utensils, etc. Also, the care needs to be taken that this 'Money for Work' should only be an encouragement to work and not turn into the employer-employee relationship. For this, the inevitable expenses such as school fees, books, uniform etc. should be borne by parents. Also, to maintain the warmth of the relationship, birthday parties or some trips also need to be arranged by the parents and not charged upon the pocket money of kids.
Thus, developing the habit of pocket money helps making the kid realise the importance of available resources, labour, savings and developing many other skills such as budgeting, management, decision-making etc. But, while inculcating these, it should be taken care of that the warmth of parent-kid relationship is maintained and the kid doesn't get into wrong practices such as theft or bribe.
Hiral D. Myatra