By Chanel Smith EMEA Editor (PYMNTS_EMEA)
Youngsters in the UK are getting a raise, and are now receiving an average of £6.50 in weekly allowances.
Many British households are still feeling the pinch due to high inflation rates and stagnant incomes. Yet kids are immune from the credit crunch since a new study from Halifax reports that in the last year, the weekly amount that parents are giving to their tots has risen by 8.7 percent. A year ago, the average amount was £5.98, and now kids receive about £6.50 in pocket money each week. Tightened budgets leave some wondering how much parents should be shelling out, and if it allowances are even necessary. Furthermore, where is the extra money coming from?
The Telegraph reported that the recent allowance increase is a positive indication for growing confidence in the economy. The study suggests that parents are currently gaining or expecting monetary rewards at work. Halifax reports that some consumers are still struggling financially, however they would rather make sacrifices elsewhere rather than stop giving pocket money to their children.
Researchers question the principle of pocket money, but argued that weekly allowances are a useful tool for helping children understand the value of budgeting and saving money. Children can learn at a young age the decision-making process of how to spend and save funding.
Others argue that abundant funds only lead to wastefulness and uncontrolled spending. The study showcases the other side of the argument, and stated that some think allowances encourage a distorted perception of the value of money. The Telegraph article stated that pocket money is bad because it is “encouraging financial profligacy” and even breeds “state dependence.”
Despite the raise in weekly allowances in the last year, children are still receiving far less than they were before the economic recession. In 2005, the average amount parents were handing out was £8.37 per week.
To read the full story at The Telegraph click here.