Many of us will remember how excited we were to receive our pocket money every week when we were children. We don’t know about you, but we used ours to buy sweets from the corner shop virtually every week. However, just because you received pocket money as a child doesn’t mean you have to give your own children pocket money now – whether you give it at all, and how much you give is completely up to you. With all the different financial options available nowadays, is the world of pocket money changing? And, how important is it in a child’s development? We take a look at the statistics and thinking around the subject to help you make an informed choice for your own children.
Pocket money statistics
A 2016 survey by Experian showed that 70% of parents with children aged 5-18 give their eldest child pocket money. More than half of these parents (51%) said the reason they give it is to teach their children money management skills. An ongoing Halifax study has reported that pocket money is at the highest level it has ever been. The average amount given per week in 2016 was £6.55, 6% higher than the previous year.
It has also been highlighted that on average, boys get more pocket money than girls. A recent Aviva survey found that the average difference was 80p per week. They also found that when children turn 11, their pocket money rises roughly 18% per year. That’s an annual increase of around £1.78!
Related: How To Teach Children To Spend Responsibly
Impact on money management
So, with more than half of parents wanting to give pocket money to teach their children vital lessons on how to deal with money, how does it actually impact your child? Head of Halifax Savings, Martin Giles says, it ‘is a great training tool in money management and a fantastic way of instilling a sense of the value of money from an early age.’
The Halifax study showed that 79% of children save some of their pocket money, with almost 1 in 8 saving all of it. A huge 90% of parents said they encourage their child to save some of their money.
But, does it all come down to parental guidance? 57% of parents think that they are the biggest influence on their child’s money management skills, according to the Money Helper. It’s therefore important that parents have open and honest conversations about money with their children. It’s also a good idea to give pocket money on a regular basis. The Money Helper says, ‘lack of consistency could make it harder for children to understand how to manage money for themselves, potentially impacting the development of budgeting skills.’
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Tips for giving pocket money
There is no right or wrong way to approach pocket money, but here are a few things to consider for your child:
Give them tasks to complete – 70% of parents in Aviva’s survey said the amount of money they give is dependent on chores. Giving your child a job to complete means they can learn the importance of earning your money instead of just being handed it.
Introduce money management into everyday life – Child Psychologist, Dr Elizabeth Kilbey says, ‘When you go shopping, encourage your child to make a choice between two items so they understand they can’t ‘have it all’ or explain to them that whilst two products are very similar, one is cheaper and it can be sensible to go for that one.’
Make a savings chart – Giving your child a visual aid to update each time they save money will help them feel encouraged. Include an item they are saving for at the end so they can feel a sense of achievement when they reach the final goal.
Open a savings account – for older children, having their own savings account will be a great introduction to the digital banking world. Let them track their savings and interest gained online and help them deposit cash into their account.
What are your thoughts on pocket money? Let us know in the comments!
