The traditional piggy bank is predicted to disappear from UK homes as parents lead the way towards a cashless society, with children's pocket money the latest expenditure to go digital, a new study by money.co.uk has revealed.
Almost one in three (31%) parents now pay pocket money digitally
Even Santa and the Tooth Fairy are transferring money online with 17% and 13% making payments directly into children's accounts
50% of parents say digital banking makes it easier to teach children about money
Money.co.uk has seen a 47% increase in the number of visits to its prepaid card page since February 2019
To help parents tackle the subject of finances with their offspring, money.co.uk has created a guide on how to talk to children about money
Research by financial comparison site money.co.uk, highlights that almost a third of parents (31%) now pay their children's pocket money directly into their bank accounts, with the figure rising to almost half of parents (46%) with children aged 142.
With recent reports also revealing that cash has fallen behind both debit and credit card purchases for the first time in history3, and predictions that fewer than one in 10 transactions will be made using cash by 20284, the move towards a cashless society is gathering pace.
Traditional monetary gifting occasions are also moving away from physical cash. 59% of parents said they now send cash online for special occasions such as birthdays (41%) and almost two fifths (17%) said money from Santa was now being delivered digitally5. The money.co.uk poll of 2,000 parents with children aged four to 14 also highlighted that cash under the pillow could be on the way out too, with one in eight (13%) parents stating the tooth fairy paid money straight into children's accounts6. More than a quarter (27%) of parents questioned revealed that their child doesn't currently have a piggy bank and almost one in 10 (8%) revealed their child has never had one7. Current accounts and prepaid cards like goHenry are the most popular forms of digital banking for children, with a quarter (25%) of parents choosing to pay pocket money into them8. Alternative digital payments such as eBay credit or Amazon and Argos vouchers were also used.
Salman Haqqi, personal finance expert at money.co.uk, said: "Pocket money is a wonderful way for children to start to learn about finances. New banking apps aimed at kids include some fantastic tools and games that make learning about money visual and fun, without the need for stockpiling spare change.
"As our love affair with online shopping continues to intensify and smartphone shopping now the second most popular way to shop, it makes sense that parents would move more of their expenditures online, including their children's pocket money.
"At money.co.uk we've seen a 47% rise in the number of visits to our children's prepaid cards comparison table since February 2019, as more parents look to move to digital accounts for their youngsters." Teaching children to budget (26%), convenience (24%) and safety (20%) are the main reasons parents have turned digital with pocket money payments9, with almost two fifths (17%) stating their child wants to spend their pocket money online or on their phone. Today's under 14's receive an average yearly pocket money income of £241.28 (£4.64 a week), with London kids receiving the most at £348.40 per year (£6.70 a week) and those in the South West receiving the least at £189.80 a year (£3.65 a week)10. The average starting pocket money for four-year olds in £2.38 per week, rising to £7.57 per week for 14-year olds. Parents are happy to move online too with 50% saying it made talking to their kids about money easier11.
Overall though, 71% said they still rely on spare change to introduce their children to finances but 52% have turned to the internet or mobile apps to start their offspring's financial training12, with most parents starting their banking discussions when their children are six years old13. Regionally, Londoners are leading the move online with 37% of parents saying they give pocket money digitally, whereas parents in Scotland are least likely (18%) to use online banking to pay14.
Notes to editors National research of 2,000 parents with children aged four to 14 by Censuswide Research on behalf of money.co.uk (23-30 Sept 2019)
2Respondents were asked 'What traditional things are you taking digital?' 31% of respondents chose 'Pocket Money'
3British Retail Consortium data (Sept 2019)
4UK Finance Report (Oct 2019)
5Respondents were asked 'what traditional things are you taking digital?' 59% of respondents chose at least one option. 'Birthdays' was the highest response, 41% of respondents selected this option and 17% selected 'Money from Santa'.
6Respondents were asked 'what traditional things are you taking digital?' 13% selected 'Money from the tooth fairy'.
7Respondents were asked 'Does your child have a piggy bank?' 19% selected 'No, but they used to have one' and 8% selected 'No, they have never had a piggy bank'. Adding both responses equals 27%.
8Respondents were asked 'How do you currently give your child pocket money?'. 17% responded by choosing 'Bank transfer to current account' and 8% responded with 'Prepaid cards'. Combining both responses results in 25% using current accounts and prepaid cards.
9Respondents were asked 'Why are you not giving your child cash as pocket money?'. Top responses were: 'It teaches them how to manage a budget' (26%), 'Convenient' (24%) and Safer (20%) and 17% responded with 'They want to use their pocket money online or on their phone'.
10Respondents were asked 'How much pocket money do you give your child each week?' The highest mean amount was from London (£6.70) and lowest was from parents in the South West (£3.65).
11Respondents were asked 'Do you think having less cash available around the house makes teaching kids about money more difficult?' 50% selected 'Yes' and 50% selected 'No'.
12Respondents were asked 'How did/will you teach your child about money?' The top selected option was 'Using spare change' (71%). In addition, 22% chose 'Using the internet', 15% selected 'Using my phone calculator' and 15% selected 'using education app on my phone', combining these results in finding 52% use the internet or mobiles.
13Respondents were asked 'What age did you start to teach your child about money?' Mean age (excluding those who chose 'Have not started') was 6 years old.
14Respondents were asked 'How do you currently give your child pocket money?' 37% of parents in London selected 'Bank transfer to current account' and 'Prepaid cards'.