- Pocket money increases at almost twice the rate of inflation (9%), from £6.97 to £7.58 year-on-year.
- Tasks deemed most worthy of pocket money include washing the car, looking after younger siblings, and cleaning the bathroom
- 53 percent of parents say their child is good at managing their money
- Gillean Dooney, Head of Families at Barclays, shares top tips on how to teach your children about money
Children in the UK are set to receive a pocket money pay rise this year, as average weekly ‘salaries’ are to increase from £6.97 to £7.58 – almost twice the rate of inflation.
New research from Barclays reveals how much parents value having their children lend a hand around the home, with over two-thirds (68 percent) rewarding them with pocket money. Kids have to prove they’ve put in the work to earn those extra pennies though, as the overwhelming majority (74 percent) of parents say a pocket money pay rise is dependent on their child picking up more jobs around the house.
For the savvier youngsters, it may be worth focusing their efforts on household jobs such as washing the car, looking after younger siblings, and cleaning the bathroom, as these are set to reap the biggest pay-outs – worth an average of £2.28, £2.27, and £1.85 respectively. When it comes to breaking into the piggy bank, some things never change, as sweets and chocolate are the most popular way for kids to spend their money (38 percent), followed by toys (33 percent) and video games (32 percent).
But what is changing is the way in which parents dish out the pennies – whilst six in 10 opt for the traditional cash-in-hand, almost a quarter (22 percent) now give pocket money via a bank transfer.
The good news is that there may be a generation of savvy savers on the horizon, as over two-fifths (44 percent) of children resist the temptation to spend their hard-earned money and instead choose to save it. This has clearly impressed their parents, as over half (53 percent) say that their child is good at managing their money.
Gillean Dooney, Head of Families at Barclays, said: “If your kids are happy to do their bit around the house, pocket money is a really good way of teaching them the value of money at an early age. Many of the parents we surveyed said that this was one of the biggest motivators behind giving pocket money to their children. It’s also a great way to help youngsters learn about the benefits of saving their spare cash – and the importance of patience and saving up to get something you really want. At the same time, if kids are ‘earning’ their money by fulfilling household chores, you’re helping them to build up a strong work ethic.
“It’s never too early to start learning about money, and there are a number of handy resources available if you’re looking for more guidance on how to bring up money education at home, such as Barclays LifeSkills. I hope the nation’s kids enjoy their pocket money pay rise in 2022 – it seems like many of them have earned it!”
Gillean shares her top tips on how to teach children financial literacy from a young age:
1. Start pocket money young – Our research found that most parents start giving their child a little something from seven years old, which is a great age for them to start learning about the value of money and associating it as a reward for completing a task or behaving well. It’s never too early to get into that mindset and encourage children to save up their pennies for a treat.
2. Talk to them about money – Having open conversations about how money helps you afford the house you live in, the food you eat, and the activities you do as a family will help your child understand how money works in the adult world. Trying to get them to understand the role of money in everyday life is a good thing to do from an early age, and you can explain it in more detail as they get older. This will hopefully stand them in good stead when they have to manage their own finances.
3. Set up a home tuck shop – To provide additional real-world context, why not set up a tuck shop at home and give them a fixed amount of money to spend on snacks each week? By creating a menu with prices for each snack, such as a 10p apple and a 25p packet of crisps, they’ll need to think about how much they want to spend each day to make their money last. It could turn into a fun game of shopkeeper for the whole family.
4. Teach them the difference between wanting something and needing something – Help them to understand why sometimes you need to prioritise things you need, such as school shoes, over things that are ‘nice to haves’, such as a new video game. This is a really important lesson so they can start to understand the importance of budgeting and prioritising purchases. It also helps them learn about the benefits of saving, as a way of affording some of the things you want, as well as the stuff you need
5. Make saving more visual – Help them visualise how their money can build up by turning old jars into homemade piggy banks. Or for bigger items, consider opening a children’s savings account, and creating a visual plan with key milestones that they can track and tick off along the way. Work together to choose something that they want to save for and ask them how much they think that would require. Once agreed, get your child to theme their homemade piggy bank or visual plan around that item, for example covering it in pictures of clothes from magazines if they’re saving for a new item of clothing. It’s a fun, quick, and easy way to get children excited about watching their savings grow.