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Children rake in “out of pocket money” extras

Children rake in “out of pocket money” extras

Category: Savings

Updated: 12/12/2013
First Published: 12/12/2013

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 It is now over 6 months old so the content may be out of date.

Families everywhere are gearing up to spend a small fortune on their children this Christmas, but research from Nationwide has revealed the amount they already spend on "out of pocket money" extras – with children getting a whopping 342% more money on top of their monthly allowance.

According to the research, children between the ages of 5 and 18 get an average of £31.64 pocket money per month, but in terms of total expenditure parents are typically spending some £139.87 once added extras are factored in – meaning £108.22 is spent per child, per month, on extras.

These extras include the likes of extra-curricular lessons (accounting for £34.81 of extra spend), clubs and societies (£14.48), non-essential technology such as phone credit or music downloads (£15.05), as well as £43.88 being spent on non-essential clothes, toiletries and miscellaneous purchases, such as hobbies and meals out.

The bank of Mum and Dad seems very much open for business, and with Christmas just around the corner children are set to rake in even more.

But, instead of focusing on short-term novelties and presents that will be forgotten about in the coming weeks, some experts are encouraging parents to instead take a more long-term view. Regularly putting aside money into a children's savings account, for example, could easily add up to a generous sum over the years, giving them a valuable nest egg that they can take into adulthood.

Junior ISAs are big news at the moment and there are some impressive deals that can be found, as well as impressive returns, giving you (and your child) the chance to benefit from tax-free allowances and long-term investment potential. Parents can put in money on behalf of their children or, if children are old enough, it could be time to start encouraging them to get into the savings habit too.

That monthly pocket money (or even a portion of it) could be put to good use in a Junior ISA, and think about all those cash gifts set to be opened over Christmas! It's a great opportunity to get children into the savings habit and giving pocket money itself can help instil a sense of financial management, making a lasting contribution to their long-term financial health.

What Next?

Check out our pick of the best children's savings accounts to get your kids into the savings habit

Don't have a child trust fund? Save up to £3,720 in 2013-14 and check out our Junior ISA best buy chart

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.