Every parent has a different take on pocket money, including how much they give their little ones and at what age their kids should start receiving it. For a lot of children, the introduction of pocket money by their parents is the first experience they have with managing money. New research by Halifax has shown that although the thinking behind pocket money hasn’t changed, the amount given has.
According to Halifax*, children’s pocket money has increased more than twice as fast as the wages of their parents. The data shows that since 1987, pocket money has risen by 462 per cent. Children in the UK between the ages of eight and 15 now receive an average allowance of £6.35 a week, compared to the £1.13 that children received in 1987.
Meanwhile, the annual UK wage has unfortunately not seen such an increase, with the typical annual wage increasing by 188 per cent over the last 27 years. The average annual wage in 1987 was £11,648, compared to the average wage of £33,511 in the present day.
A survey conducted for thinkmoney** this spring found that many parents start educating their children about money early on; with half of three-year-olds getting an allowance of up to £1 a week. Once a child has reached the age of five, pocket money is shown to increase from pence to pounds. The survey also found that between the ages of five and 11, the average pocket money sum rises by around 50 pence every three years.
Giving your child pocket money is a great way of introducing them to the importance of money management and budgeting. To help you introduce pocket money to your child, we have a few helpful tips to get you started:
1. Get them to earn the money: A common way for children to earn pocket money is to do chores around the house. According to the Halifax data, 65 per cent of children stated that they earn their weekly allowances by helping out around the home. Getting your child to do household chores in return for pocket money will help them to understand that in order to get paid, a good standard of work has to be done.
2. Let them pay: When at the shops or travelling by public transport, hand your child the money to let them pay. By having the money in their hand, they will feel responsible and grow to understand that money has to be exchanged for products or services.
3. Help them to save: If your child is desperate for the latest toy or piece of technology that their weekly allowance won’t stretch to, help them to save up their money. By sitting down with them and calculating how many weeks it will take to save up their pocket money, they will begin to understand that for more expensive items money has to be put aside over a longer period of time.
4. Keep to your side of the bargain: Make sure to give your child what they have earned on time and consistently every week. This will help them to see the benefits behind hard work and want to continue to earn their pocket money. Data collected for thinkmoney found that 29 per cent of parents ‘sometimes’ remembered to give their children allowances, and nearly one in five rarely did.
5. Involve them in money-making decisions: For older children, involve them if you are making a large purchase like a holiday or new TV. Get them to look on price comparison sites with you to engage them in the discussion and help them understand that prices vary and some companies offer better value than others.
**OnePoll questioned a nationally representative sample of 1,822 adults aged 18 and over between 25th February and 7th March 2014.