A recent study conducted by comparethemarket.com has shed light on a surprising financial trend among parents in the UK. The research, part of the latest Parentdex report on pocket money, surveyed 5,000 parents and uncovered a concerning revelation — one-fifth of parents admitted to tapping into their children’s savings to meet day-to-day living expenses.
The survey found that almost half of those who borrowed from their children’s piggy banks did so to pay household bills, while 19 percent resorted to using their kids’ savings to cover the costs of groceries. Ironically, over one-sixth of parents dipped into their children’s funds to finance childcare expenses.
Jody Coughlan, Money Manager at comparethemarket.com, commented on the findings, stating, “Fortunately for kids, the wider squeeze on the household budget seems to have had little impact on the generous amounts parents want to give their children. That said, parents do need to ensure that they are able to give their kids this pocket money without needing to dip into it to cover wider household bills.”
The study also delved into the spending habits of British children who receive an average monthly allowance of £23, amounting to £276 annually. This collective pocket money pool for kids in the UK totals a substantial £3.9 billion.
Surprisingly, children’s savings accounts appear to be in relatively good shape, with the average child having a noteworthy £982.50 saved. In fact, one in five children has an impressive £2,000 tucked away in their savings.
The research also revealed that children are not solely reliant on their pocket money; four in five parents provide extra funds to cover unforeseen expenses such as new clothing or social outings. These ad hoc requests prompt one-fifth of parents to supplement pocket money every two weeks, and more than a quarter to provide additional funds on a monthly basis.
Grandparents also play a significant role in contributing to children’s finances, with one-quarter of grandparents contributing to their grandchildren’s income. Two-thirds of these grandparents offer generous financial assistance whenever they spend time with their grandkids.
Geographically, children in London receive the highest average pocket money compared to their counterparts in other regions, with parents in the capital providing an average of £29 per month. In contrast, children in the east of England receive £19 a month, while those in the south-west receive £20.
Despite these financial dynamics, the study revealed a positive aspect — the confidence parents have in their children’s financial management abilities. Nearly three-quarters of parents believe their children will be well-equipped to handle money as they approach adulthood. This confidence is attributed, in part, to discussions about money management taking place at home, with nine in ten parents stating they have talked to their children about financial matters.
However, there is a consensus among parents that schools should do more to provide financial education. Four-fifths of those surveyed expressed the belief that schools should take a more active role in teaching financial literacy, filling the void left by the absence of formal financial education in the current curriculum.
Jody Coughlan concluded, “It’s incredibly encouraging to see the number of parents who are willing to talk to their children about financial management from such an early age. Not only will this do more to prepare them for financial responsibility in the long run, but it should also help to lessen their long-term dependence on the Bank of Mum and Dad as a result!”
