Special report: Pocket money 2014
Does pocket money teach savings habits for life? Pocket money is often used as a tool to help children get a grip on money. Do children in Europe still receive pocket money from their parents and how are they getting pocket money these days?
Executive summary
Respondents who received pocket money as a child are more likely to say they regularly add to their savings and to save for retirement. They are also less likely to regularly be overdrawn on their bank account. Of six money habits, people who received pocket money are more likely to show greater financial competence in four. But it is not possible to conclude from this whether pocket money is the cause of the greater financial competence or if there is simply a correlation.
When asked how much pocket money they give to their children, Italian parents top the 2014 pocket money index. In contrast, the Czech Republic was the lowest ranked in our pocket money index – but exchange rates and lower average incomes are likely to be a factor here. The Dutch stand out as being less generous with pocket money than parents in neighbouring countries. In Austria, the rate spikes for children aged 15+, perhaps suggesting greater financial independence for Austrians in their late teens.
The share who received pocket money as a child is similar to the share who give it to their children now, however, there are some interesting differences that have emerged over time. Paying into a bank account appears to be increasingly common, while working for pocket money (both inside and outside the home) is much less common. At the individual country level, pocket money appears to have become more popular in Italy (with a higher share giving it now than receiving pocket money as a child) and the reverse is apparent in the Netherlands (where much fewer parents give pocket money than received it as a child).
As many might expect, the number one reason parents surveyed give their children pocket money is to teach how to be responsible with money. Teaching the value of money is the second most common response, followed by “so that they can buy the things that they need”. The vast majority of respondents who give pocket money have seen an improvement in their children’s understanding of the value of money.
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