Twenty-first century children – they don’t know how lucky they are – or wealthy. New data shows that pocket money for children is at its highest for nine years. The average pocket money for kids in 2016 is a generous £6.55 per week compared to a measly £1.13 back in 1987 when the Halifax started their records. But the whole concept of pocket money can be a minefield as parents try to fathom out how much is too much, what’s not enough and what’s considered a ‘reasonable’ amount so that other kids’ parents don’t raise their eyebrows?
The national average
In the UK, the overall average pocket money across all age groups is £6.55 and it’s the highest it’s been since 2005 when pocket money was £8.01. But how much you get varies around the country, and it’s probably no surprise that kids in London get the most pocket money with an average of £8.21 – which is an inflation busting 7.3% more than they got last year.
Perhaps more surprising is that parents in Scotland, the North East and the North West are also generous with pocket money. Far from the stereotypical reluctance to put their hands in their pockets – parents are coughing up some princely sums. Scottish parents give a weekly average allowance of £7.06; its £6.51 in the North East (up by 8.5% from last year) and £6.68 in the North West which is a staggering increase of 11.1% from 2015.
Coming of age
Between six and seven is when parents typically start giving children pocket money. And age also plays a factor in how much you get, 14 year olds appear to get the most (£8.03), whilst eight year olds receive £5.06 a week – which is a bit of a downer for hard up nine year olds who only get £4.68 on average, in comparison.
Plus, if you thought gender pay inequality only happened in the workplace – then think again – because boys get 12% more pocket money than girls. The latest survey showed that boys received £6.93 compared to £6.16 for girls. Worryingly rather than the gap getting smaller, it’s actually bigger this year compared to last when the difference was just 2%.
Chores, chores, chores
Cinderella’s got nothing on some kids who have to work just as hard for their rewards – jobs include emptying the dishwasher, tidying bedrooms, laying the table and even doing the ironing. Some lucky children get pocket money without needing to do anything except be themselves but have the opportunity for even more cash if they do additional jobs.
Pocket money benefits
Having an allowance isn’t just about letting your kids buy sweets, stickers and games; getting them to understand the value of money is a lifelong skill, and it’s one that’s harder to learn than you might think.
When kids get pocket money they’ll start to realise how much things actually cost because they can associate the value of money against certain items. It’ll also give them an appreciation of the relationship between their work (if they do chores) and the value of the reward they get. They’ll also realise that when it’s gone, it’s gone (which means you can’t keep topping it up no matter how much they moan).
Real money for the real world
You can take learning about money a step further and encourage your kids to open a bank account. Most high-street banks will have a current account available to children, and you’ll usually get similar features to a ‘grown ups’ account such as online management, Electron card (similar to a debit card but with a few restrictions so you can’t go overdrawn), cash withdrawals and interest.
There’s also a growing number of prepaid debit cards specifically tailored for children that’ll give them (and you) a real insight into how they’re earning and spending their money. Go Henry, is just one example, and it works by parents transferring money onto a prepaid debit card. Children can use the card (in this case partnered with Visa) in shops just like an adult; they can also withdraw cash but there’s no overdraft facility and so no fear of Richie Rich bringing back the entire contents of the local toy store.
Unlike traditional bank accounts, you’ll get useful features such as up to date alerts on what your child is spending and where, there are parental controls too so you can set spending limits. It’s also available to children from age six which is the big advantage as many children’s bank accounts start from age 11. Osper, is another children’s debit card but this time, partnered with MasterCard.
Set the example
Children learn best by example, so is your money invested as wisely as it could be? Why not take the opportunity to review current and savings accounts as well as check whether your cash ISA really is giving you the benefit of a decent return? And what’s even better? You can set the example for efficiency too because you can click and compare right here at comparethemarket.com.