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We typically think of the current major recession as mostly affecting adults, but recent research from Tesco Bank shows its hitting children where it hurts too: with their pocket money. Moreover, the same survey revealed many other interesting tidbits, including what Britain’s kids do with their money, and advice on how parents can foster better spending habits.
Cutting back
Nearly 25% of parents nationwide have decided to cut back on their kids’ pocket money, to the dismay of children everywhere. Beyond the simple fact that many children have seen their weekly allowances cut, however, the “Every Little Helpers” report from Tesco came to a number of other interesting conclusions. For instance, the report finds where in the country pocket money handouts are the most generous, or stingy, as well as who earns more, girls or boys, and what the kids actually do with their hard earned cash.
London kids earn most
Unsurprisingly, the best paid kids live in wealthy London and earn an average of £7.81 weekly, compared to the national average of £5.80. Children from Swansea, Glasgow, and Liverpool are almost equally well off. On the other side of the spectrum, we can only feel for the young ones from Wrexham who earn a meagre £2.50 a week.
In return for work
Of course, for the parents the most important factor is not how much to give their kids, or how much they earn in pocket money, but rather with developing good money habits at an early age. To this end, the same survey found that pocket money wasn’t simply given freely in most households; in fact, 71% only handed out the funds in return for completing some household tasks or chores.
One third save
So, parents are probably most interested in what exactly the UK’s youth are doing with earnings and, unsurprisingly, most are spending it as soon as they get it. On the whole, boys earn more than girls, but they also spend their pocket money faster, much faster. In total, only about a third of children save their hard won quid, whilst the rest eagerly spend it as soon as it comes in (sounds like many adults in the pre-global credit crunch days).
Advice
Fortunately, the Tesco study did more than just point out our children’s shrinking pocket money and how their spending habits mimic their parents. It came coupled with advice from psychologist Dr Elizabeth Kilbey, who, in the video below, gives even more important advice on teaching your young ones financial responsibility.
Develop good habits
Dr. Kilbey narrows the keys to instilling good money habits from a young age into 5 main points; firstly, it’s important to separate money from play. That is to say, money is not a toy, it’s an adult thing and children should be taught as much. Then we all know about the second point, letting children take charge of paying and getting back the correct change on any shopping trips. Many young kids typically want to do so anyway, so that lesson is an easy one for parents.
Saving and bargain hunting
In order to encourage saving meanwhile, Dr. Kilbey recommends using a clear jar for storing their pocket money. This way you can mark a clear financial goal on the side and easily track progress towards said goal, which is then rewarded when reached. Another valuable skill to teach your young charges is the act of bargain hunting and comparing prices to reach the best deal on an item. Getting them started at such a young age will ensure wizened negotiators and savvy hagglers in later life. Finally, in the end money exists to buy things, so show your children just how much pocket money saving is required to buy a desired toy.
Parents on right track
Of course, many parents already do much of the above; in fact, the same Tesco study says up to 65% of parents have already held in-depth talks with their young kids origins and concept of money. Nevertheless, it’s important to emphasis that good spending habits developed when their young, will stay with them throughout their lives and definitely help in their future (of course yours too when you retire).
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