This content is paid for by Lloyds Bank.
Children are topping up with digital revenue streams such as social media moneyspinners and online selling – and they are learning to save for big purchases.
Pocket money is an emotive topic. At a time when household budgets are under strain, it is perhaps not surprising that, for the majority of children, pocket money has been declining. In 2022 the average weekly pocket money for 8 to 15-year-olds was £4.99, according to Statistica – a sharp drop from £6.48 in 2021 and £7.55 in 2020.
An exclusive new YouGov survey of 1,067 parents, commissioned by The Times in partnership with Lloyds Bank, asked how much they thought it was right to pay their children. Parents of children under 11 agreed it should be, on average, £4 to £5 a week. But parents of 12 to 15-year-olds thought their children should receive on average £7, while 16 to 18-year-olds should get just under a tenner (£9.58).
However, theory and practice do not always tally. Only 7 per cent of the parents felt that children should get no pocket money. Yet, when asked how much their children do receive from themselves or anyone else in the household, 37 per cent said they get nothing – and for 16 to 18-year-olds it’s as high as 65 per cent.
“The increased cost of living can make it harder for parents to offer children pocket money,” says Andy Bickers, savings director at Lloyds Bank. “There are other ways to develop a positive relationship with money such as talking to your children openly, which helps to equip them with the skills they will need to make smart financial decisions for the rest of their lives.”
Parents appear divided on whether household chores should be financially rewarded. There was a fairly even split between those who paid their children for helping around the home (53 per cent) and those who did not (47 per cent). Naturally this varies with age: only 26 per cent of 3 to 4-year-olds are paid for chores, while two thirds of 12 to 15-year-olds (67 per cent) are.
Whether due to household financial pressures or because young people want to spend more than their parents did, the money children get from their parents is increasingly not considered enough on its own. Between the ages of 5 and 10, about one in ten children find some way to earn extra income outside the home. By secondary school (12 to 15 years old) nearly one in five (17 per cent) do so, rising sharply after the age of 16 to nearly half (47 per cent).
HOW DO KIDS MAKE THEIR MONEY?
Many kids have at least one source of income besides pocket money, with social media revenue streams overtaking more traditional jobs such as babysitting.
Sample: all parents with children 11-18 with an income besides pocket money
You might think of children doing babysitting or paper rounds (both 8 per cent). But an even more sizeable proportion of those who earn money outside the home are harnessing the internet to become digital entrepreneurs. These creative kids are boosting their pocket money with income from a social media profile or uploading video content (9 per cent) or selling items online (14 per cent).
Doing chores for other people such as neighbours also ranks highly at 17 per cent, with this activity tailing off after the age of 16. This is the point at which genuine part-time or full-time jobs in retail and hospitality become the main moneyspinner, with 60 per cent of 16 to 18-year-olds who earn extra cash following that time-honoured route. Fortunately, 76 per cent of parents of this age group say they understand employment rules for young people, such as minimum age and wage, maximum working hours, times of day and so on.
Our survey found that, by the age of 12-15, more children spend money online (62 per cent) than don’t. The good news is that they are also putting some money aside for larger purchases, or for the future in general: 66 per cent of children are already learning the saving habit.
Breaking these figures down, we find the saving habit begins early: 28 per cent of 3 to 4-year-olds are already savers, as are 55 per cent of 5 to 8-year-olds. By age 9, almost three quarters (73 per cent) save, with 81 per cent of over-16s having a nest egg.
Parental influence appears to be a big factor here. Half of parents actively instil the savings habit in their 3 and 4-year-olds. An impressive 88 per cent of parents with children aged 12 to 15 are on the case.
“There are many apps and accounts that help children keep tabs on their spending and saving,” says Bickers. “The Smart Start* account from Lloyds Bank allows children to rename their account after what they’re saving for and see the progress of their savings goal in real time – a great way to help build your child’s financial confidence.”
*Parents/guardians need to have an existing Club Lloyds Current Account and be registered for Internet Banking
For more information about the Smart Start account for children, search Smart Start fromLloyds Bank
This content is paid for by Lloyds Bank.
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