Parents are dipping into their kids’ savings to supplement day-to-day living costs, a study has found. Researchers polled 5,000 mums and dads and found one fifth have borrowed money from their children’s piggy banks and accounts in order to pay their living expenses.
Nearly half of those have taken cash out of their little one’s savings to pay household bills, with 19 percent borrowing money to cover the cost of groceries. And, ironically, 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 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 report uncovers the spending habits of British children who receive an average of £23 a month, 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 the capital 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 the youngsters 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 states they have talked about money management with their children. However, parents clearly feel their children would benefit from additional teaching in schools, with 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!”