Doling out weekly pocket money is a time-honoured tradition among parents. Not only does it help to teach children about the value of money, but it also helps them learn about saving it, and it seems that more and more kids are cottoning on to the benefits of keeping their pocket money safe and sound in their piggy bank.
Many parents are happy to dish out a small sum to their children every week for them to spend or save as they wish, and it appears that parents are currently feeling particularly generous: according to Halifax's annual Pocket Money Survey, pocket money allowances are currently at their highest level for nine years. On average, children now receive £6.55 every week, an increase of almost 6% over the last year.
However, rather than splurging this extra money on toys, sweets and games, it seems that the majority of children are stashing at least some of their cash away - 79% of children in the study save part of their pocket money, up from 70% last year, while 12% save all of their cash. The research revealed that 10-year-olds tended to be the savviest savers, with 88% of this age group in the study putting all of their pocket money aside to save, while the onset of the teenage years resulted in 13-year-olds being the least likely to save.
If you want to raise of brood of savvy savers, then pocket money can be a useful tool, as Giles Martin of Halifax points out: "Pocket money is a great training tool in money management and a fantastic way of instilling a sense of the value of money from an early age," he said. "Getting children to set aside even just a small amount each week can help them to develop a strong savings habit that will serve them well through to adulthood."
According to the survey results, 90% of parents asked said they already encourage their children to save a bit of their pocket money, while 9% encourage them to save it all. But why not go one step further and make your child's money work even harder for them?
Putting money into a piggy bank is a great way to develop the savings habit, but getting your child to put the money into a children's savings account could be even better - this way they can learn about managing their money while also receiving interest on what they put aside.
Another option could be to open up a Junior ISA (JISA), which allows tax-free savings up to the current limit of £4,080. If your child has a Child Trust Fund (CTF), you can now also transfer the money to a JISA. JISAs tend to pay better interest than a CTF, so it may be worth investigating.
So, if you want your children to grow up with some financial know-how, take a look at our children's savings accounts and JISA best buys to find the perfect home for your child's pocket money.
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