Pocket money appears to be going out of fashion with children turning to side hustles to secure an income, new research has found.
According to analysis of customer data by NatWest and its youth debit card provider Rooster, the average weekly allowance sits at £3.78 - 3% (10p) down year-on-year. The number of kids getting a regular stipend has also dropped from 32% to 30%, the findings showed.
But the data revealed that youngsters have been turning to other income streams, with chores and entrepreneurship proving to be more lucrative than last year. It means a typical child is now pocketing £479.96 a year (£9.23 a week), with weekly earnings ranging from £5.68 for a six-year-old to £24.71 for a 17-year-old. These figures are broadly flat against the year.
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It comes as families have battled through two years of soaring inflation, which has brought about the worst cost of living crisis in a generation. The rate of price hikes remains above the Bank of England’s 2% target, but earnings have been making up for some of the erosion of the value of the pounds in our pockets. We will find out how high inflation was in April later this week.
Despite these financial pressures, children have been good at locking their cash away in their piggy banks. Their savings rate sits at an average of 9.5% (£45.60) a year. MoneyWeek has rounded up the best child bank accounts, and has also put together advice on junior ISAs.
Average pocket money income just a ‘small fraction’ of kids’ overall earnings
NatWest and Rooster measured the spending activity of almost 308,000 children aged between six-years-old and 17 through the pocket money app they jointly run. The data covers transactions made between 1 March 2023 and 29 February 2024.
The annual ‘Pocket Money Index’ showed that pocket money now makes up just 14% of the average kid’s overall income, with today’s youth proving to be enterprising when it comes to how they get hold of cash. As well as charging extra for chores, they are squeezing more money out of their side hustles.
For example, cleaning the car raked in £3.25 on average - 32% (79p) more than it did 12 months ago. Meanwhile, paper round earnings increased 2% (45p) to £23.10 a week. It meant last year’s most lucrative entrepreneurial activity - reselling - was bumped into second place after the amount of money it typically generates fell 15% to £22.62 per week.
Although pocket money seems to have become a less popular way of rewarding children, parents have continued to stump up for one-off events and surprises. NatWest Rooster Money found the typical tooth fairy visit has become 9% more lucrative year-on-year, coming in at £4 a pop. Good behaviour rewards soared 12% to £8.79, while the returns on completing development tasks, like reading, grew 7% to £5.53 on average.
In terms of where this money was being spent, the app found most of it was finding its way into Amazon’s coffers. Tesco and McDonald's rounded out the top three. Apple dropped out of the top 10 most popular brands, with fashion marque Shein taking its spot.
NatWest Rooster Money: kids’ financial behaviour ‘completely changing’
Reacting to the figures, Will Carmichael - CEO and founder of NatWest Rooster Money - said they showed children’s finance in the UK was undergoing a significant shift.
He said: “One of the key revelations for me is the way kids’ money is completely changing shape. Although pocket money in its traditional sense is seemingly declining, that doesn’t mean it’s any less important; but rather that kids are increasingly complementing it in other, more sophisticated ways. This move to greater independence and maturity in their earning has been fantastic to see and bodes well for some bright, financially-confident futures ahead.”
One sign of greater maturity in children’s financial affairs was seen in their attitude to saving. Their savings rate of 9.5% was not far behind that of their parents, with the average adult putting away 10.2% of their income. NatWest Rooster found 55% of kids’ savings were being put towards specific targets, with gaming proving to be the most popular category. Saving for the future was the third most popular reason for saving, coming in behind holiday money.
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