YOU can teach children financial skills early by giving them pocket money.
But deciding how much to give can be a minefield.
Olivia Marshall explains everything you need to consider and analyses the best bank and savings accounts for kids . . .
THIS will depend on how much you can afford to give, and how many children you have.
Children receive on average £55 a month in pocket money, according to Santander. But it varies by age group, up to 18.
The average six-year-old gets £3.33 a week, says chores and pocket money app GoHenry.
This goes up to £5.14 for ten-year-olds and £14.84 for 15-year-olds.
These figures may sound sensible to some mums and dads, while others may think it’s too much.
Each parent should decide what they feel is a reasonable amount to give and whether to do it on a weekly or monthly basis.
Louise Hill, co-founder and chief executive of GoHenry, said: “The amount doesn’t need to be big, it’s all about giving children the opportunity to have a bit of financial independence and decide how they use their money.”
TEACHING your children that money does not grow on trees gives them an important life lesson.
You could explain that parents work to put food on the table and pay household bills.
You may then want to offer them cash in return for completing chores, once they are old enough. Simply do what you feel is best for your family.
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, said: “You might find a compromise that works, where there are some chores they’re expected to do separately from their pocket money.
“You can then pay them a basic allowance that covers their needs, and on top of that offer additional chores for extra cash.”
IT’S a good idea for kids to get to grips with cash.
Giving them coins can teach some valuable lessons. For example, young children may be surprised to learn that a single pound coin is worth more than a load of pennies.
But as the world becomes more and more digital, it may also be useful to give them experience of safely using apps or pre-paid cards.
You could divide up the pocket money you give them so that half is provided in cash and the remainder digitally.
This will give them the best of both worlds and make sure they are familiar and confident, early on in life, with both physical and digital finances.
A CHILD can have a regular bank account from the age of 11 or a children’s one from six years old.
These accounts tend not to have monthly fees and work like adults’ accounts. Nationwide, HSBC and Santander all offer options.
Nationwide’s FlexOne current account can be opened with £1 and pays two per cent interest on balances up to £1,000.
It comes with a contactless debit card.
There is a separate easy-access savings account paying up to five per cent interest on up to £5,000.
HSBC’s MyMoney also offers a current and savings account.
The MyAccount, for age 11 to 17, has a contactless debit card but pays no interest.
A linked savings account is managed online and pays five per cent interest on £10 to £3,000.
Santander’s 123 Mini current account has no linked savings but pays three per cent interest on £1,500 up to £2,000.
Plus, parents can choose between a contactless debit card or a cash card, which cannot be used at ATMs.
There is also an account for under-13s when a parent already holds a Santander account.
But for parents who want a little more control, prepaid debit cards and apps are a good choice.
Alastair Douglas, of credit app TotallyMoney, said: “In an increasingly cashless society, prepaid debit cards can be a great start to learning about saving and spending, while parents can limit how much and where money is spent.
“These often come with small monthly or annual fees, or need the adult to have an account with the bank.”
GoHenry, Nimbl, Revolut and NatWest’s Rooster Money are easy apps to use, with prepaid debit cards to let kids spend money.
Parents can add cash and set spending limits.
GoHenry charges £3.99 a month for its most basic membership, £5.99 for its Plus product and £9.99 for its Max.
Plus and Max both offer 4.5 per cent interest on savings.
Nimbl is a pocket money card and app for six to 18-year-olds and costs £2.49 a month or £28 a year.
If you have more than one child, you pay an extra £1.99 a month, or £23 a year, for the extra card.
Unlike GoHenry, it doesn’t offer interest on savings.
Revolut <18 is for ages six to 17.
It has no monthly fee but the parent must have an account, and there is a £4.99 card delivery fee.
ATM withdrawals are limited to £40 a month.
Rooster Money is free for NatWest, RBS or Ulster Bank customers.
For non-customers, it is £1.99 a month, or £19.99 a year, but it does offer a one-month free trial.
Pre-paid cards aren’t protected by the Financial Services Compensation Scheme like regular bank accounts, but are regulated by the Financial Conduct Authority.
THIS is a great habit for children to get into.
Help them set up a plan to squirrel away money – you could put it all in a savings account then let them choose what they do with it.
Rachel Springall, finance expert at moneyfactscompare.co.uk, says: “It may seem daunting to build up a substantial savings pot for a child’s future but there are a variety of accounts to choose from, where parents can save, little and often, to slowly increase a nest egg.”
In this scenario, an easy-access savings account is probably best because it gives you quick access to the cash.
Another option is to split your child’s allowance, with some going into a current account, or prepaid card, and the rest to savings.
If you want to do this, consider a fixed-rate savings account, where you lock away your money for a set amount of time at a set interest rate.
These offer higher rates than easy-access accounts but you are unable to withdraw your cash.
Saffron Building Society is currently offering 5.55 per cent on its 12-month children’s regular saver.
If you invested £100 a month here, after a year you would have £1,236.08.
If you’re looking longer term, a Junior ISA (JISA) is a tax-free savings account where parents and relatives can stash up to £9,000 a year for kids, who won’t be able to access the cash until they turn 18.
Coventry Building Society currently offers the highest interest rate for a JISA, at 4.95 per cent.
The account has a fixed term until the child turns 18.
MUM-of-three Cassandra Cannon gives each of her two oldest kids, Macy, ten, and eight-year-old Sidney, £3 a week through Nimbl.
It offers a prepaid Mastercard debit card which parents can top up, monitor and manage using the app.
Cassandra, 40, from Kent, who works in HR and is also mum to Leo, three, says £3 a week is OK for her budget and enough for her children to buy the things they want without asking her for more money.
Macy and Sidney are savvy savers, each having built up around £100 in their Nimbl account.
Cassandra says: “Macy has been asking for £26 Nike Pro shorts because all the girls are wearing them, but they are quite expensive for what they are.
“With no birthday or Christmas coming up, I gave her the option of using her money.
“It is where money lessons through pocket money really work.
“If Macy wants the shorts that badly, she should be willing to spend her own money on them.”
Cassandra, who is divorced, reckons she has saved around £20 a month by giving her children pocket money, because it has stopped them asking her for cash to buy things they can buy themselves.
Macy also believes getting a regular allowance has taught her valuable life skills.
She says: “I like having a card because then I don’t have to carry cash around and I feel like a grown-up because I’m learning how to use it in shops, which will be important when I’m older.”
