Discover the Ultimate Pocket Money Hack for Raising Wealthy Kids | Money

Money cheats

From payment cards and apps to quants, there are ways to help kids learn to manage finances

Sun, June 11, 2023 at 5:00 am EDT

Cash or card?

Some parents still give their children bills and coins as pocket money, but many children now have little contact with cash, and a growing number of families are turning to the various payment cards and apps that have emerged to serve this market.

Most combinations of cards and apps work in a broadly similar way: Kids are given a prepaid contactless card to use in stores and online and (usually) at ATMs. The money is loaded onto the card and the parents and child can track spending via the app. Adults can set spending rules to keep control, such as deciding where the card can and cannot be used. They are also notified when the card is used. Meanwhile, the money can usually be split into various pots or targets.

Generally, children aged six and older can use the cards. However, many of these services have a monthly or annual fee, although there is often a free trial period.

NatWest operate one called Rooster Money, which is now free for existing customers of NatWest, Royal Bank of Scotland and Ulster Bank, but costs £19.99 a year or £1.99 a month for everyone else.

Revolut offers a similar service called Revolut <18 for 6-17 year olds, where you can download the app and create a free account. However, you must have or open a personal Revolut account for your child to have one.

Other popular options include GoHenry, which costs £3.99 per child per month; Osper, which costs £2.50 a card per month; and nimbl, which costs £2.49 a month or £28 a year.

There’s also HyperJar, whose offering of prepaid debit cards and apps for kids is free, with no signup or monthly fees.

pros and cons

The card and app services all work in slightly different ways, so it’s worth comparing products before deciding which one to sign up for.

For children aged 11 and older, you may want to consider a children’s bank account. These are offered by most commercial banks and charge no fees.

They work in much the same way as bank accounts for adults, although children can’t go overdrawn. However, there is usually less supervision available for parents. You probably won’t be able to control how much they’re spending or where they’re spending it.

How much?

Once you’ve decided how you’re going to pay your children’s pocket money, you need to decide how much to give them.

The latest findings from NatWest Rooster Money’s annual pocket money index report, released last month, show that the median annual income of children increased by 11% in £333.84 per year or £6.42 per week. However, that average obviously covers a wide range of ages. The 16-year-olds enjoyed the highest weekly win – £12.75 on average.

Meanwhile, the most recent data from GoHenry found parents were paying a weekly average of £7.54 per child. A breakdown showed that six-year-olds received £3.04 a week, 11-year-olds received £6.21, while 16-year-olds received an average of £14.68. It indicated that parents in London paid the most – £9.96 on average each week – followed by £8.09 for Scotland and £7.85 for the South East.

How many times?

It would appear that an increasing number of children are not receiving a regular fixed amount. NatWest Rooster Money said pocket money routines were becoming “much less consistent”, with 57 per cent of children receiving regular allowances in 2022-23 – down from 65 per cent a year earlier – as the crisis ongoing cost of living.

He believes that instead of committing to handing over a fixed and regular amount, parents are increasingly inclined to pay one-off payments for household chores, special occasions and rewarding good behaviour, whether it be for performing well in school or simply do homework or “be well”.

Jobs

Pocket money is often paid as a reward for helping with various household chores, but what is the going rate for each household chore?

Nearly half of parents make completing chores a condition of regular pocket money, NatWest Rooster Money found. Average payments for household chores included £2.46 for cleaning the car, £1.11 for helping with shopping, 96p for vacuuming and 64p for helping with the garden. However, the household chores most commonly performed weren’t the ones that earned the most money: Children more often chose to make the bed, unload the dishwasher, clear the table, clean the bedroom, and take care of a pet.

Meanwhile, GoHenry recommended a range of daily activities, including making the bed for 20p and feeding the pets for 20p, and weekly chores such as tidying the bedroom for £1 and dusting for 50p.

Those teenagers old enough to get into more lucrative side businesses have fared well, with many now making more than £20 from things like babysitting stints.

Putting money aside

The Rooster Money kids have saved on average 8% (equivalent to £27.94) of their earnings over the past year, which has been described as “an impressive feat given persistent inflation”. Examples of goals the children have actually achieved include saving £1,000 to put into a savings account, £200 for an iPhone and £900 for a travel fund.

Konnie Huq, TV and radio host and children’s author – who didn’t have pocket money growing up – recently said that teaching children from an early age about the value of money and the importance of using it wisely “is crucial, especially in these uncertain times”.

She added, “As a parent, I know I want to make sure my children are well equipped to be financially wise and responsible in the world to come.”