Is It The Savings Account For Children’s Pocket Money Or The Shops?

Published: 17 August 2011 By MoneyHighStreet Staff 1 Comment

The average amount of pocket money children receive has risen, perhaps giving more of an opportunity for some to be put in a children’s savings account as well to spend some?

Children's Pocket Money and Children's Savings accountsThe latest Halifax Pocket Money Survey shows that the average money received each week rose to £6.25 from £5.89 in 2010. At a 6% increase this is interestingly more than even the latest  reported level of inflation.

There are small gender differences now, with girls getting £6.09, compared with boys getting and average of £6.41.

As you might expect there are also differences by age group. At 8 years old the average is £4.44 per week, whereas it’s almost double this for 15 year olds at £8.38 per week.

Children who live in London get on average the most pocket money at £7.63, closely followed by those in Scotland, West Midlands and the South East.

Interestingly, over a third of children don’t talk about money and don’t know how much their friends received each week perhaps they are starting early in seeing discussion of personal finance type subjects as rather a ‘taboo’?

Flavia Palacios Umana, head of savings products at Halifax, said: “It is encouraging to see the amount of pocket money children receive has increased from last year, this gives kids the chance to save their money as well as spend it.

“It is interesting to observe that despite the current economic climate the number of children who receive pocket money has remained the same; teaching children important financial life lessons by using pocket money will quickly give them understanding of basic financial issues and more important the consequences associated with making and spending money.”

MoneyHighStreet comments: “It will no doubt be helpful to some parents to see what the ‘going rate’ is for pocket money. Clearly it is important for children to understand about money and learn about managing their saving and spending habits.

Halifax offer a couple of children’s savings accounts

  • Halifax Children’s Regular Saver – available for adults saving on behalf of children under 16, with one account per adult on behalf of each child allowed. Earning a rate of 6.00% AER/gross p.a. fixed for one year, you can save between £10 and £100 each month, for 12 months. Once the twelve month term is up, the money saved and the interest earned will be automatically transferred into your nominated account, or a Halifax save4it account.
  • Save4it – a passbook pocket money savings account designed especially for children up to 16 year olds. Accounts can be opened with as little as £1 and the maximum balance is £5,000. Interest is payable annually on any chosen day (e.g. birthday). The current interest rate is 1.05% AER/gross p.a.

“Whilst the Regular Saver seems attractive, at the maximum deposit of £100 per month, the maximum investment that can attract the higher interest rate is £1,200, and that is only there for the last month. So it’s good but you need to make sure you understand what you are getting.

“Another account to consider is the Lloyds TSB Young Saver account which pays a competitive 3% on balances up to £20,000.

The clear message is to be very careful to take note of the interest rate on your savings accounts, particularly where a bonus amount is paid in the first year. Don’t do as one of the team here at MoneyHighStreet has done and forget about your children’s savings accounts for some years only to find that money is languishing in accounts paying next to no interest at all.

Be proactive and if need be move your savings to take advantage of bonus offers – sadly it no longer pays to be a loyal customer.

Comments

One Response to “Is It The Savings Account For Children’s Pocket Money Or The Shops?”
  1. Jack Tennant says:

    Before anyone gets carried away with a rate of 6%, it’s worth noting that you’d only earn about £30 for saving the maximum £1200 over the year and this then transfers to the Save4it account which gives you just 1% – what an incentive to encourage you to be a customer for life.

    Maybe Flavia and her team should allocate their research budget to bolstering these poor rates, after all if another brand in the group can be generous enough to offer 3% for youngsters why can’t Halifax?

    JT

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