British teens taught to budget

Teenagers are doing well out of the current economic downturn, as parents raise pocket money to encourage them to learn money management skills.

New research by NatWest Adapt reveals that instead of tightening purse strings, over two thirds (63%) of parents have boosted their brood's spending power, and switched from the traditional means of giving youngsters ‘pocket money' (smaller amounts of money to spend as they like) towards the system of giving an increased allowance.

Of those parents taking this step, almost three quarters (64%) cite a need to teach their children the value of money in the current economic climate.

In a surprise twist, young parents are most likely to give a monthly allowance. One in ten parents in their early thirties claim to provide their children with allowances of up to £300 a month.

To cover daily living expenses, today's teens receive an additional £30 per month on top of pocket money, giving them an average of around £51 per month to manage. Yet far from being a luxury, these new allowances come with strings attached. In a bid to instil good money management, sixty-percent of parents expect their children to cover their own travel fares, with a further one in ten insisting that school uniforms are covered. One-fifth of parents expect this extra money to cover the cost of essential study items and stationery.

The UK's growing allowance culture sees a fifth of all parents paying instalments into their children's bank account so that they can learn how the banking system works and get prepared for things to come.

The economic downturn has led to a new and heightened financial awareness among parents. Studying their own current financial situation means that a third (35%) of parents think children as young as the age of 12 should receive a more substantial allowance so they can work to a budget and fund their own daily expenses. The average age that a child starts receiving such an allowance is 14 ½.

In single parent families, the emphasis on learning the value of money is even greater, with over two thirds agreeing that an allowance is the best way of teaching children to do so.

Mark Worthington, NatWest Head of Youth Banking says: "Rather than limit the money given to their children, parents are actually increasing it in order to help them develop the money management skills that young adults will need over the coming years.

"It also appears parents are keen to get their children used to more day to day banking products such as current accounts in addition to traditional savings so they can learn about the importance of budgeting and seeing where their money goes. Providing that parents continue to offer the necessary support and guidance, this is a very encouraging trend."

As well as the economic downturn, forty percent of parents say the reason for boosting their children's monthly allowance stems from a concern that they don't appreciate the value of money, and a fear that this will have a negative impact on them in the future.

Social psychologist, Dr. Alicia Renedo comments: "An allowance culture enables teenagers to engage in healthy behaviour when it comes to cash. The sense of empowerment that this brings instils an appreciation of the real value of money and helps them to mature. However, there's a fine line between giving them responsibility and making teens feel they're fending for themselves - it's important for younger adults to feel a sense of protection and authority from parents."