Cut pocket money and make children get a paper round, say experts
April 4, 2013 Leave a comment
Those who earn money from a young age are more likely to save for the future, a study has concluded.
It is the reply that every long-suffering and cash strapped parent has been waiting for.
Economists have concluded that giving children generous amounts of pocket money is bad for them, encouraging financial profligacy and even breeding “state dependence”.
But sending them out to get a paper round or paying them to do household chores can set them up for a life of prudence, they found.
According to a study published by the Royal Economic Society today, the more pocket money children are given, the more likely they are to spend it immediately.
But those who earn money from a young age are more likely to save for the future, the study concluded.
And those who save money as children are also more likely to do so as adults, the authors added.
Prof Sarah Brown and Prof Karl Taylor, economists at Sheffield University, analysed responses to questions in the annual British Household Panel Survey over a 17-year period.
The study, by the Institute for Social and Economic Research, involves 10,000 interviews with people of all ages, to gauge opinion on matters as diverse as finance and sex to religion.
Children aged between 11 and 15 were asked how much pocket money they received, whether they worked and whether they saved it all, spent it all, or a combination of the two.
While most of the children saved some money for toys or new mobile phone accessories, almost a quarter said that they spent all of it immediately without putting anything away.
The researchers noticed that those who received the largest amount of cash from their parents without having to work for it were also most likely to spend it all without saving.
They calculated that even a one per cent increase in a child’s pocket money reduced the probability that they would save money by a fifth.