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Tough times for young savers

Tough times for young savers

Category: Savings

Updated: 25/01/2011
First Published: 20/09/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Children are feeling the effects of tightening household budgets, with the amount of pocket money they receive falling to a record seven year low.

In 2009, the average amount a child received per week was £6.24, but in 2010 children are receiving £5.89, research by Halifax shows.

Pocket money last fell below the £6 mark in 2003, when children could expect to receive £5.79 per week.

However, it seems that many children are not too bothered by the drop, with almost half (49%) saying they get the right amount.

Interestingly, two fifths (37%) believe their friends get more money than them, while almost a third (28%) never tell their friends how much they really receive.

The good news is that children are learning about money management, with a tenth saying they save all their pocket money and a quarter saying they saving at least half.

A third of children (35%) say they will save money to buy something they really want.

"It is encouraging to see that children are still saving, despite the amount of pocket money falling," commented Flavia Palacios Umana, head of savings products at Halifax.

"Teaching children how to manage their own pocket money is a great first step to building good financial awareness in our youngsters.

"Developing the habit of saving a little and often will stand them in good stead in later life as they will able to see their savings mount up over time."

Children in Wales get the most pocket money (£7.77), whilst those living in London have seen their pocket money slashed by almost £4, falling from £10.79 to £7.02.

There are a number of savings accounts on the market that are designed especially for young people.

Even saving a small amount each month can add up to a tidy sum by the time a child reaches 16.

Putting away just £25 a month for 16 years adds up to £4,800 before interest.

Our Children's Savings Accounts Best Buy tables set out a number of the best children's accounts in the savings arena.

They include Northern Rock's Little Rock Fixed Rate Bond Issue 2, an exclusive account for savers aged under 16, that pays a fixed rate of 4.00% on funds until 1 October 2013.

The account can be opened with just £1 and has a maximum deposit limit of £20,000, while an adult must be named as a trustee.

Find the best savings rates for your child - Compare savings accounts

Read our Changes to Child Trust Funds Guide

Download FREE Child Savings Plan brochures

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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