The Changing face of Pocket MoneyAegon Content Team 24 November 2016 Back to results
Managing your money can be a bit tricky sometimes, especially as life goes on and expenses increase. The world of pocket money might seem like a minefield and your approach might vary depending on the age of your children, your personal values or disposable income - not to mention a multitude of other factors. Of course, at the heart of the pocket money debate is the hope that we, as parents, can instil a solid work ethic in our children, teach them about the value of money and encourage ‘saving behaviour’ from an early age.
To Save or Spend…that is the question
What did you spend your pocket money on as a child? Some of us may have had a sweet tooth, while others might have saved for the latest single, LEGO toys, a magazine, a styrofoam plane or a trip to the cinema.
Personally, I remember offering to wash neighbours cars at the weekends, with a financial incentive from my father who kindly offered to match my earnings. Of course, he knew that the often questionable Scottish weather and boredom would set in imminently and result in a somewhat minimal output of finances on his part.
A member of the Aegon sponsorship team told us that she used to get two pounds every week and it was mostly spent on sweets, as well as the occasional 7” single. This responsible individual did, however, have a job from the age of 12, so from that moment on, the pocket money stopped. She does admit warily that she was never really a saver...of course, we cannot comment on whether this behaviour has continued on in later life.
A colleague in the Marketing team at Aegon told us that they mostly saved their pocket money for upcoming family holidays on which they hoped to contribute by paying for their own hair braid. (We are almost certain that this hair braid was more of a hindrance to her parents than a ‘contribution’, but the intention was noble.)
While some of you might have memories of receiving a small weekly amount, for the naughtier among you, pocket money may have been reduced or withheld completely. Lesson learned?
When it comes to teaching your children about the value money and the benefits of saving, you may approach the subject with trepidation. Many parents encourage their children to earn money by taking on a weekend job, doing household chores or helping in the garden in the hope that they will, as a result, learn more about the value of money. (Although for many of us sitting in an office at this very moment, we would not consider cutting the grass as work. In fact, when the sun is shining, there is nothing that we would rather be doing.)
Top ways to encourage your children to save:
- Get the little ones a piggy bank early – putting in coins, hearing a jingle and feeling the weight build up will make saving fun, even if they don’t quite know what they are saving for. This is also a great way to get your kids handling actual money – living in a cashless society might often be convenient but it does have its drawbacks.
- Encourage them to budget. By getting the kids to make realistic lists of things they would like to buy, alongside how much they need to get there, they will soon learn how easy it is to spend money versus the length of time it can take to save. The next step is to help them to prioritise these lists.
- Pocket money in return for tasks, chores and positive behaviour is an oldie, but a goodie. Not only will you benefit from a bit of help around the house and garden, but your kids will soon learn to associate positive behaviours with financial reward. (Fingers crossed they remember it throughout their teenage years.)
- Look into money saving apps and prepaid cards. Often, these allow children full control of their money – within your parental limits. Your children are probably familiar with technology already, and so are likely to pick these up in no time.
- Everyone loves a bargain – why not help your kids find the best deal on one of the items on their list? Whether it's eBay, a charity shop, a January sale or an internet comparison, learning where and when to cut costs will help them down the line.
How much is pocket money anyway?
A 2015 survey by Halifax Bank revealed that the average amount of pocket money given to children across all age groups was £6.20. London parents were the most generous, giving whopping £7.65, while those in Scotland were not far behind at £7.27. The survey also revealed that the number of children receiving pocket money had decreased, however, 10% children receiving pocket money saved it all, while 70% tried to save some of it for something special.
The research also showed that the amount of pocket money kids receive is growing significantly, outpacing wage growth by a massive 255% since 1987. No that’s something to think about - lucky kids, indeed.
The Value of Money
Even some of the wealthiest celebrities want to instil in their children the value of money. Sir Elton John has revealed that he makes his kids do chores, including gardening, for their pocket money. Similarly, the Beckham’s children receive pocket money for loading the dishwasher and tidying up after the dogs, while their eldest child, Brooklyn, was reported to be doing weekend shifts at his neighbourhood coffee shop last year to earn a bit of cash. Although you may have doubts about how far that money will go, the lesson is hugely valuable for all children.
Pocket money has certainly changed over the years; from piggy banks to post office accounts, savings accounts to ISAs. While living in a primarily cashless society does present its own set of problems, technology can help to alleviate these. Apps such as goHenry and Osper allow children to understand money with a modern perspective.
goHenry is a pre-paid card and app with parental controls that enables children to spend and save – within reason. Similarly, Osper is an app designed to give 8-18-year-olds the ability to set up savings goals, track their progress and take the first steps towards financial independence.
Helping children to understand the value of money early is key, as is encouraging them to save. This behaviour, if encouraged, can last a lifetime.
How are you teaching your children the value of money?
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