Children’s pocket money growth has outpaced inflation in the UK

Despite a major financial crisis in the UK, British children have reason to be happy as new data shows their allowances – known in Britain as ‘pocket money’ – have outpaced both inflation and their parents’ wage increases over the past year.

Year-over-year, allowances are up an average of 10.69% — more than inflation, which rose 10.4% on a yearly basis for the NatWest Rooster Money pocket money index released Thursday.

On average, children in the UK now receive £333.84 ($415.08) in pocket money per year, £32.24 more than in the previous survey period. On a weekly basis, the average is now £6.42, which is about $8, up £0.62 from a year earlier.

Six-year-olds saw the biggest year-on-year increase, at 34.5%, more than triple inflation. You now get £3.94 a week, over a pound more than £2.93 before.

Fifteen year olds were the only ones to see pocket money drop by £0.52 to £9.72 a week. However, those just a year older took home the largest amount of money – 16-year-olds were paid £12.75 a week, slightly more than the average of £12.59 for 17-year-olds.

But the cost of living crisis is having an impact on spending money, says Will Carmichael, CEO and co-founder of NatWest Rooster Money.

“Household budgets are being stretched like never before and we’ve seen fewer children receiving regular weekly pocket money compared to 2021/22,” he said in the report, adding that many families are trying to prevent children from doing so, however be affected by rising prices.

The annual NatWest Rooster Money Pocket Money Index is based on data from 126,122 children in the UK collected between March 2022 and February 2023. ‘Pension money’ is defined as the sum of regular allowances and supplements from things like birthdays etc tooth fairy, getting good grades and doing chores.

According to the report, birthdays bring the biggest increase, averaging £47.01, while good grades on exams or certificates come second at £15.98, around £1 less than last year. Of all subjects, good grades in math give children the biggest markup on their pocket money.

Other common reasons parents top up their children’s child benefit include good behaviour, doing homework, reading and the tooth fairy – although this only contributes an average of £3.24 to children’s income.

When it comes to chores, the financial rewards for the top five most popular tasks range from £2.46 for cleaning the car to £0.64 for helping out in the garden.

According to the report, in addition to pocket money, children also earn some extra money. Reselling their clothes and toys brought them the biggest profit – at an average of £26.26. Babysitting came in second, with revenue up a whopping 24%, while tutoring came in third.

Kids don’t spend all their money either – on average they save 8% of their cash or £27.94 a year. For all six to 17 year olds in the UK, that would amount to just over £265m, according to NatWest Rooster Money calculations.

“That’s enough to fund The LEGO Movie (and four sequels) or buy 80,547,985 Happy Meals,” the report said.

Happy meal maker McDonald’s was also among the places where kids like to spend their money, ranking fourth. Apple was up one spot, while the top two spots were taken by UK supermarket chains Tesco and Co-op.

Another supermarket chain, Sainsbury’s, rounds out the top five. Online spending on platforms like PlayStation Network and Microsoft Xbox has declined – now ranks ninth and tenth respectively.

“Despite the advances in things like in-game currency, it’s clear that some things aren’t changing,” Carmichael said.

“Kids still flock to stores and newsagents in droves, presumably to buy the classic sweets, drinks and snacks, as many of us will remember when we were kids!”