UK CHILDREN are facing pocket money stagflation, according to the latest study by kids money management specialist, RoosterMoney.
The average amount of pocket money children got in 2021 was £6.14, down fourpence from 2020 levels (£6.18). Next to a 5.5% inflation rate, it seems like kids aren’t exempt from the same macroeconomic pressures their parents face.
Indeed, the ‘cost of being a kid’ is higher than ever, with desk research from RoosterMoney uncovering soaring prices for the items kids most love to spend their money on. LEGO (which is second on RoosterMoney’s ‘Most Saved For’ list) was at the receiving end of a petition regarding its price increases recently, whilst the cost of gaming has increased in the face of new, next-gen consoles such as the PlayStation 5 and accompanying higher-priced games.
What’s more, according to Kantar, crisps and soft drinks – some of kids’ favourite treats – have experienced some of their biggest price rises in years, and – in response to the pandemic – some leading cinema chains have hiked their ticket prices by as much as 40%.
Wage deflation is fuelling the surge of the side hustle
Whilst kids’ pocket money has stayed flat year on year, where the money comes from is changing, with go-to chores now earning them less.
Faced with a decrease in pay of 4.7% across the top five lucrative household chores (washing the car, mowing the lawn, raking leaves, cleaning windows and gardening), helping around the house has proved less significant on kids’ pocket money levels.
To make up for this wage deflation, children have increasingly turned to ‘side hustles’, with sales of old possessions on platforms such as Depop growing by 67% between 2020 and 2021. Performing well at school was another high earner, after payouts for a good school report rose by 75% (from £8.15 in 2020 to £14.94 in 2021).
Aunts and uncles outstrip doting grandparents in gifting stakes
Special occasion ‘boosts’ also helped children navigate wage deflation and cost of living increases – children received £41.94 on average in birthday money, compared to £34.81 in 2020.
Interestingly, aunts and uncles have overtaken grandparents as the most generous gifters – averaging £19.90 in special occasion handouts compared to grandparents (£15.22). This is a reverse of 2020, when grandparents gave out an average of £18.99 compared to aunts/uncles dishing out £17.75.
Despite the difficult economic climate, kids managed to save 39% of their pocket money last year, up 2% on 2020 levels.
There was little change in how many parents gave their kids regular allowances in 2021 (66% in 2020 versus 65% in 2021), and Saturday remained the favourite for payday, accounting for 62% of children (versus 63% in 2020). Both Wednesdays and Thursdays were near write-offs for pocket money, with only 2% of children coming into a midweek pick-me-up.
Will Carmichael, RoosterMoney CEO says:
“Our 2022 Pocket Money Index is revealing in a number of ways. Despite facing stagflation – caused in no small part by wage deflation for household chores – it’s clear that kids are as resourceful as ever, having turned to re-selling their items to top up their RoosterMoney cards, and saving more than ever.
“We’ve seen some shifts in spending habits, too, with phones overtaking LEGO as the most saved-for item.
“Now, more than ever, instilling financial capability in our kids is so incredibly important. The financial impact of the pandemic has the potential to affect us for a generation – perhaps several.
“Having confidence with money, building positive habits around saving and learning to make considered spending choices are essential skills that will stick with kids for life.”
RoosterMoney was acquired by NatWest in 2021 as part of the bank’s strategy to help families and young people manage their finances more easily.
APPENDIX:
Top things to SPEND on in 2021:
Roblox & Fortnite stay at the top as kids continue to spend time at home in 2021.
|
Pocket Money Spending Charts 2021 (vs 2020): |
|
|
2020:
|
2021:
|
Top things to SAVE for in 2021:
LEGO loses its place atop the list for the first time ever, after being displaced by mobile phones.
|
Pocket Money Saving Charts 2021 (vs 2020): |
|
|
2020:
|
2021:
|
Top ways to EARN in 2021:
The most lucrative jobs stay in similar territory, but the top 5 highest fees shrink by nearly 5%.
|
Pocket Money Earning Charts 2021 (vs 2020): |
|
|
2020:
|
2021:
|
Top places to SHOP in 2021:
Gaming stores and in-app spending continue to dominate, while fashion makes its top-10 debut.
|
Pocket Money Shopping Charts 2021 (vs 2020): |
|
|
2020:
|
2021:
|
*the payment processor used by Roblox
