Parents, pocket money and squirrels
Pocket money is a massive headache for parents. “Mum, how come Amy gets £10 more pocket money than me a month...it's not fair!?" When should it begin? How much should you give? How should pocket money be earned? These are the questions confusing parents every day, where financial goals are no longer as easy as buying football boots or their favourite makeup - it’s about mobile phones, apps and the latest gadgets.
In Robert Gardner’s book, Save Your Acorns, he discusses the squirrel - before eating any of their hard earned acorns, the squirrel saves 20% of them and learns to live on those that remain. Saving a proportion of your income is a tough concept to grasp at any age, let alone for children and teenagers, however, the earlier you jump on the bandwagon...the better! Pocket money is an underrated training tool for money management, instilling a sense of saving and investing at an early age. The goal - develop a healthy relationship with money.
Here are some stats to help you make better pocket money decisions as a parent:
1. The Money Advice Service believe only 52% of UK parents discuss money matters regularly with their kids. Interestingly, the concept of saving is being discussed at an average age of 9, however, pocket money is being drip fed at the age of 8. Are you leaving it too late to have these practical discussions?
2. Intelligent Environments conducted research last year and found that 80% of parents introduced their kids to digital money management from a young age - with 28% paying kids in digital currencies and 34% transferring weekly amounts into their kid’s digital bank accounts. Forget piggy banks, it's all about digital dashboards these days.
3. In Halifax’s recent Pocket Money Survey of 8-15 year olds and their parents, they found children in East Anglia get by far the least amount of pocket money (averaging £4.96 per week), with kids in London receiving an average of £8.21. Around 79% of children are saving their pocket money, showing a 9% increase from the previous year. These guys have been doing research into children’s pocket money since 1987, so get digging if you want the full story.
4. Rooster Money have created an pocket money index, examining the habits of kids aged 4-14 in the UK. 73% of parents choose to give a regular allowance, with Saturday unsurprisingly being the most popular pocket money day across the UK. The number 1 thing kids spend their money on is apps, whilst top savings goals include Lego, mobile phones and holiday money. Funny enough, kids are earning extra cash for being brave, behaving well or having a visit from the tooth fairy.
5. Last year’s annual Childwise Monitor report showed a divide between primary school and secondary school aged children, with the former generating less in the form of pocket money. Girls aged 5-16 receive £2.20 per week less than boys, whilst the report suggests the former are also given less financial autonomy. Notably, such trends are not anomalies - Halifax's survey showed similar findings, with boys receiving 12% more pocket money than girls. Other trends included more children receiving 'ad-hoc' handouts than previous years.
For me, the most alarming statistics hints towards the gender pay gap starting at an early age, along with a trend towards 'ad-hoc payments' vs regular pocket money. The former creates an unhealthy norm at such an early age, with the latter providing little in the form of money education. Nonetheless, regardless of any dubious statistics, I will let you digest and decide. One thing is for sure - giving your kids pocket money is an amazing way to teach them about the value of a penny, saving and learning to live on a budget. After all, in 2016 the Money Advice Service stated that around 16 million in the UK have less than £100 of savings to their name. In my recent vlog about the concept of ‘micro-investing’, I spoke about making the conscious effort to save small amounts regularly in order to create a wave of positive change through positive habits. This is the way forward for millennials, whilst instilling this habit of operating like a squirrel at an early age is a catalyst for financial security and success.
In the digital age we live in, here are 3 companies who can give you a helping hand:
1. Rooster Money - It enables kids, from as young as 4, to earn virtual pocket money whilst keep track of their rewards and financial goals via their digital account. Their site also has lots of educational content for both kids and parents!
2. GoHenry – A pre-paid pocket money card (and app) for kids aged 6-18, with helicopter parents having specific controls enabling them to monitor where and when their child is spending cash.
3. Osper - This pre-paid debit card, powered by MasterCard, enables kids to track their spending and saving each month. Parents get their own app which helps them oversee spending, set controls and even lock the card if it’s been lost or stolen.