Around three-quarters of parents give their children pocket money, but the amounts can vary hugely. It can be very difficult for parents to decide when to start giving their youngsters money and how much they should give.
There is then the question of what kids should use this money for and what, if anything – they have to do to earn it.
The average amounts
A study by Aviva found that the average amount of pocket money handed out was £5.75 per week, although figures from a Halifax Report suggest that this may now have reached at least £6.50. The Aviva Family Finances Report discovered that the 73% of British parents who give their children pocket money pay out a massive £43 million every week and two% of these parents do not set limits on the amount they give to their children as they simply handed out as much as was needed at the time.
Age is generally a major factor in determining the amounts children are given. The Aviva research, which involved 1,500 British parents, found that on average five- to eight-year-olds receive £2.62, nine- to 11-year-olds get £3.82, 12- to 15-year-olds receive £6.96 and 16- to 18-year-olds get £9.88 each week.
According to the study, these amounts also varied depending on where people live and not surprisingly, children in London were getting the most while youngsters in Wales were receiving the least.
However, If you add on the rise suggested by the Halifax research, a five-year-old could expect weekly pocket money of £3.37, a ten-year-old may well get around £4.57 and a 15-year-old could be in line for £7.71.
In reality, there are many variations in the amounts that are paid out, as some parents give their children a base amount and then offer them the opportunity to top this up by doing chores around the home. Others give their children much more than the average amounts but then expect their children to spend some of the money on items for themselves, such as clothes. Other parents make their children buy their own birthday presents for friends or contribute to household bills, such as paying for their telephone calls.
Some children get a relatively large sum each week or month but are then expected to put a proportion of it into a savings account. This can be a good idea to teach children about the value of saving for the future, but this actually goes against research carried out by the Department of Economics at Sheffield University. This study involved a survey of 6,000 youngsters and actually found that those who received pocket money were less inclined to save than those who didn’t. It discovered that a one per cent rise in pocket money actually led to a 22 per cent drop in the chances of a child saving. Young people with part-time jobs were found to be most likely to save compared to non-working children.
There are also those children who are given nothing unless they earn it by doing chores or achieving set targets, such as getting good grades at school or returning home on time when they go out with friends.
When to start?
Experts suggest that it is a good idea to start giving children pocket money when they begin to learn to count as this can also help the child understand the concept of money and its value from a young age. This time usually arrives at around the age of five, but many parents choose to wait another couple of years until their children have a better understanding of how to spend their money. Of course this also depends on their being able to establish the difference between what they need, what they really want and which things are just passing whims.
Other added benefits, according to experts, to giving children pocket money from a young age is that parents will be giving them skills that they can make use of throughout their lives – such as learning to save and budget.
Pocket money can also be a good way for parents to reward their children for good behavior and as money management is entering the school curriculum, it can also help children succeed in a more formal educational environment as they can apply in real life what they are being taught in the classroom.
Whichever the reason, deciding to give your child pocket money will give them the opportunity to be responsible, independent and mature with their finances.