While many adults have memories of scrubbing pans or vacuuming to get weekly handouts from their parents, it seems many children nowadays do not have much experience of “earning” cash.
More than one in four (27 per cent) parents of children aged under 12 do not give their children pocket money or financial rewards for carrying out household chores, according to new research.
The survey, from the Financial Services Compensation Scheme (FSCS), reveals that only half of parents pay their child regular pocket money.
And many of those who do give their children regular handouts do not give their child free rein to spend the cash how they like.
More than half (54 per cent) of parents who give pocket money are concerned their child would simply buy chocolate and sweets if they could spend the money how they liked, while more than a third (37 per cent) say their child would buy something they don’t really need.
Yet, as with setting children chores so they can earn their pocket money, allowing your child to have a small amount of money to spend how they like – even if this leads to them making mistakes – can help them build experience of handling money. They may even avoid making bigger financial mistakes when they’re older as a result.
Rather than raiding their whole piggy bank, a small portion of cash could be set aside for a child to spend how they like, which could help them learn how to set a budget and stick to it.
Nearly a third (31 per cent) of parents say they tend to influence what their child buys with their pocket money, and 24 per cent encourage them to save for a larger purchase.
But nearly four-fifths (79 per cent) of parents agreed that if children can engage with money from a young age, it would help them learn and appreciate its value.
Mark Oakes, head of communications at the FSCS, which protects savers if their bank or building society goes bust, says: “It is a parent’s choice how they want to get their child thinking about money, but giving them a little sum of their own to manage is a great way to start. They aren’t going to get it right every time, but children need to be given the opportunity to make their own mistakes and learn for themselves.”
Meanwhile, separate research suggests many children aren’t confident about their money skills.
Just over half (55 per cent) of children aged between seven and 15 years old worry about their lack of financial knowledge, a survey from NatWest has found.
The study, for NatWest’s MoneySense financial education programme, found more than two-fifths (41 per cent) of parents don’t talk about money management at all with their children.
Gaps in parents’ financial knowledge may explain the reluctance of some to talk about money. More than a quarter of parents (28 per cent) worry about their children asking them questions about money that they themselves can’t answer.
Yet nearly two thirds (62 per cent) of parents also worry their child will grow up without a good grasp of managing money.
So perhaps now’s the time to sit down and start having those money conversations.