Pocket money, plays a critical role in laying the foundation for financial literacy among children. Yet, a study by Metro Bank reveals that more parents might be unable to continue this practice due to financial pressures. The data also shows a surprising trend of parents borrowing from their children’s savings.
Key Points:
- Two-thirds of parents allocate pocket money to their children, but 26% may halt this due to financial constraints
- 43% of parents have borrowed from their children for various needs, with 5% yet to repay
- Pocket money serves as an essential financial learning tool for children, according to 43% of parents
- Children primarily spend their pocket money on treats, outings, toys, and savings
- 20% of parents report their children supplementing their pocket money by finding or creating work during the cost-of-living crisis
- Metro Bank’s Money Zone programme, partnering with actor Will Mellor, aims to bolster financial education for children
- The scheme has impacted 250,000 children across the country and is set to extend its reach
Pocket Money: An Essential Financial Tool
Despite financial pressures and increasing debt pressures, two-thirds of parents still provide their children with pocket money. A significant 43% regard it as an important tool for teaching children about money management, expenditure, and savings. In addition, pocket money serves as a reward for chores (23%) and helps children buy treats independently (18%).
| Purpose of Pocket Money | Percentage of Parents |
|---|---|
| Teach about finances | 43% |
| Reward for chores | 23% |
| Buy treats independently | 18% |
How Children Spend Their Pocket Money
Children’s spending habits with their pocket money provide insight into their financial awareness. The top expense is food and sweets, at 43%, followed by social outings with friends (33%). Additionally, a significant portion goes towards toys (31%) and savings for more expensive items (33%) or holiday spending (24%).
| Expense Category | Percentage of Children |
|---|---|
| Food and sweets | 43% |
| Outings with friends | 33% |
| Toys | 31% |
| Saving for expensive items | 33% |
| Holiday spending | 24% |
Pocket Money Supplemented With Jobs
In the current cost-of-living crisis, one-fifth of parents report their children supplementing their pocket money by finding jobs (12%) or even creating their own (9%). This trend demonstrates children’s initiative and adaptability in difficult financial circumstances.
Average Pocket Money
According to a survey conducted in 2021, the average weekly pocket money given to children in the UK was about £7. However, it’s important to note that the exact amount can vary greatly depending on factors such as the family’s income, the child’s age, and the region of the UK. According to the survey this is how the average pocket money per week in the UK varied by age:
| Age Range | Average Pocket Money (GBP) |
|---|---|
| 3-4 years | £3.21 |
| 5-7 years | £3.24 |
| 8-10 years | £3.65 |
| 11-13 years | £4.19 |
| 14-16 years | £4.44 |
| 17-18 years | £4.77 |
| 19-21 years | £5.40 |
| 22+ years | £6.34 |
Metro Bank’s Money Zone Initiative
In partnership with actor and parent Will Mellor, Metro Bank is taking steps to reinforce the importance of financial education for children through its Money Zone programme. The scheme, which has already provided financial education to 250,000 children by partnering with 2,800 schools, is set to expand to include bespoke programmes for armed forces communities and teenagers aged 16-18.
Final Thoughts from the Experts
Expressing his thoughts on the research, Will Mellor emphasised the pressure households are facing and the difficult decisions parents are having to make. He appreciates Metro Bank’s efforts in tackling the challenge of teaching children basic financial lessons in a world where digital transactions are becoming the norm.
Mona Patel, a personal finance expert at Metro Bank, echoed Mellor’s sentiments. She highlighted the value of pocket money as an early life lesson and the importance of starting financial education early. Patel also acknowledged the impact of the cost-of-living squeeze on families, stressing the importance of helping children understand why parents might need to prioritise essential spending.