The latest data on Pocket Money

The Halifax pocket money survey, one of the main sources of data about UK children's allowance, was recently published. You might have seen the headlines of the main newspapers shouting out the comparison between growth in pocket money paid to children's weekly and adult wages in the last 20 years.

In these terms the results seem really sensational. Children's allowances have grown a whooping 488% since 1987 against a growth in adult wages of only 197%.  

To add to the outrage the media also highlight that the percentage of children expected to complete chores for their pocket money has fallen to a mere 59% compared to last year's 65%.

Have we, parents, collectively gone mad?

"Parents are clearly very generous when it comes to how much pocket money they give to their children", says Giles Martin of Halifax, the institution that commissioned the research.

"Looking for an occupation with wage rises double those of other professions? Then stay a child as long as you can." says the Daily Mail or "Lucky kids! Pocket money rises twice as fast a wages", agrees the Mirror. (How amazing that our children's weekly payouts can get the two most ideologically distant tabloids to agree with each other!)

Not so much, we say. 

First of all we don't see a valid reason to compare what children received in 1987 to what they are getting now. No child that was getting pocket money then is still a child these days, while it is very likely than most of the adults surveyed 20 years ago are still in the workforce.

Technology has changed families' spending habits so much in this time horizon to make the comparison meaningless. A comparison of pocket money spending habits in the last 20 years would be more appropriate.  


Who pays for technology?

Most children these days have mobile phones and game consoles that generate a whole new range of expenses that did not exist in 1987.

Media consumption is more likely to be charged at single user level now than 20 years ago where TVs and house phones were shared by the whole family.

Since the turn of the millennium media outlets have become more personal, from mobile phones to game consoles, to tablets and e-readers  and we have shifted the running costs of these gadgets to our children.

Many children that are handed phones or game consoles as gifts at birthdays or Christmas are left to pay for their phone credits, games and music downloads out of their pocket money.   This is very likely to be the reason of the shocking growth figures. As we are passing down costs that we used to pick up as general family expenses, we had to pass down a higher allowance to cover them.

In this light parents certainly don't appear as mad as the news headlines suggest.

After all, expenditure on tech gadgets for children has risen to astronomical levels in the last decades, reaching 3 billion pounds during the 2013 Christmas period alone.

Having children pay for their phone and media consumption is a great way to limit the use of it while allowing them to learn money management skills. 

Are we underpaying pocket money?

The Halifax data shows another important trend. With the financial crisis, parents have cut back on allowances at a faster rate than their employers did on their wages


Weekly payments have been falling steadily since 2005 and never really recovered, remaining stagnant in the last few years. Wages however have returned to grow steadily.

After all, who wouldn't agree than an average payout of £6.20 per week is low considering the current cost of living? Would you be able to pay your phone bills, save and plan your future with that? Learning to save is important, and like ourselves, children will only be able to do so if they get enough cash left from their basic spending needs. 

HootLoot believes that if used well and with the right encouragement to be responsible for their own finances, pocket money is a tremendous learning instrument for children of all ages. 

Creating an environment where children can save to buy that PlayStation 4 they have been dreaming of, is a very healthy financial environment. The journey to reach each saving goal is so important for our children's financial future. It prepares them to real life better than books and teachers can ever do.

HootLoot has been helping children and their families learn how to save and manage their money in an effective and easy way. Check out how it works and register your family. It's completely free and secure!


Alessia is one of the founders of HootLoot, a media
professional and has previously worked in the banking sector.

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