Parents are dipping into their kids’ savings to cover day-to-day living costs, a study has revealed. Researchers polled 5,000 mums and dads and found one fifth have borrowed money from their children’s piggy banks and savings accounts in order to pay for their living expenses.
Nearly half of those have taken cash out of their child’s savings to pay household bills, with 19% borrowing money to cover the cost of groceries. And more than one sixth have done so in order to cover childcare. The research was commissioned by comparethemarket.com as part of their latest Parentdex report on pocket money.
Jody Coughlan, money manager, at comparethemarket.com said: “Fortunately for kids, the wider squeeze on the household budget seems to have had little impact on the generous amounts parents wants 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 report also uncovers the spending habits of British children who receive an average of £23 a month pocket money, totalling £276 every year and giving them the equivalent of £3.9billion to spend collectively. Research also found kids’ savings accounts are relatively healthy, with the average child having a significant £982.50 stashed away.
In fact, one fifth of children have £2,000 sitting in their savings. It also emerged children are generating a second source of income, with four in five parents giving their offspring extra money to cover unforeseen requests such as new clothing or nights out with friends. These ad hoc requests see one fifth of parents topping up pocket money once a fortnight, and more than a quarter giving these extra handouts once a month.
Meanwhile, the ‘Bank of Gran and Grandad’ appears to be another fruitful source of income for kids. One quarter of grandparents find themselves contributing to kids’ income, with two thirds giving their grandkids generous handouts as and when they see them.
Unsurprisingly, children in London are the recipients of the highest amount of pocket money compared to anywhere else in the UK, with the average parent in London giving £29 to their child each month. In contrast, children in the east of England are given £19 a month while those in the south west who are given £20.
Fortunately, the poll also shows mums and dads are confident in their children’s ability to manage their finances effectively, with almost three quarters believing they will be well equipped to handle money as they approach adulthood. In the absence of financial education at schools, this could be down to discussions at home, with nine in 10 stating they have talked about money management with their children. However, four fifths of those polled believing schools should do more to teach financial education.
Jody Coughlan added: “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!”
To read more about UK parents’ attitudes to pocket money, visit here.