The average amount going into the pockets of under-16s each week has fallen by 23% to £4.99 this year from £6.48 in 2021, according to research by the Halifax lender – the lowest figure since 2001. The UK has the highest inflation among G7 countries, hitting a 40-year high of 9.4% in June in response to rising food and energy costs. Last week, the Bank of England said it expected inflation to rise to 13% by October. It warned of a recession lasting more than a year as it raised interest rates for a sixth straight time last week to tame inflation. pocket money Two-fifths of parents still give their children pocket money and a third of them expect their offspring to do more at home to earn it. While parents have cut back on pocket money, many told the lender they were willing to make lifestyle changes to make sure they could still supplement their children’s money. Half of parents say they would sacrifice leisure spending, such as going to the pub or eating out, or give up purchases such as make-up and designer goods (45%). Just over two-fifths said they would stop spending on their own hobbies and a quarter would spend less on the weekly supermarket shop. Emma Abrahams, the lender’s head of savings, said: “As household costs continue to rise, some parents are having to make tough choices as they adapt to the circumstances they face – from reducing the family grocery bill to ending dating. or that coveted in-store shopping experience.” Children spend their pocket money on video games and sweets (both at 39%), followed by toys (30%), clothes (29%) and hobbies such as books (28%). Only a fifth of parents (22%) say their children are more likely to save their pocket money. Halifax interviewed 629 parents of children aged eight to 15 in June. In 1987, when the lender carried out its first pocket money survey, children received an average of £1.17 each week. The amount remained relatively stable throughout the 1990s before doubling between 1998 and 2000. As interest rates rose, the pocket money followed suit – but fell during the financial crisis, from £8.01 in 2007 to £6.13 in 2008. It rose to £7.71 by 2019, before falling again during the pandemic to £7.55 in 2020 and £6.48 in 2021. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Chris Payne, father of a six-year-old boy and triplets (four-year-old girls), said: “As a parent of four and working full-time in the emergency services, financial planning is important to us – and part of that is how much pocket money we give to our children. “Like others, we are experiencing the brunt of rising costs, and that means we are adjusting our lifestyles to accommodate new lifestyles – but we have not compromised our approach to giving pocket money.” Abrahams said: “We know that finances can cause anxiety in households. A pocket money is a luxury that only some parents can afford their children and, for many, it is not an option. Having an open and honest conversation with your children about what you can afford to give is likely to improve their understanding and relationship with finances in the future.”
