Figures released by Halifax, which has conducted an annual pocket money survey since 1987, suggests the average amount children receive (aged between 8 and 15) fell last year, from £6.35 a week to £6.20. This is the second consecutive year the amount has fallen. Indeed, the amounts are down considerably from the high it reached pre-recession in 2005, when it hit £8.37.
Nowadays, there are many reasons why parents may hesitate to stock their children with cash. Not only can it be lost or stolen, it can’t be used at the modern-day checkout line (online purchasing). So a great option is for parents to obtain prepaid debit cards for their kids. Although most cards require the cardholder to be at least 13 years old, A parent can obtain a card in his or her name and customize the card to say something like “Sara’s Spending” beneath the cardholder name.
In the last two years, two major apps have been developed to take advantage of the increasing move from notes and coins to digital spending. Called Osper and goHenry, they are, in effect, very basic bank online accounts (without any overdraft facility) for children aged 8 and upwards.
Both work by parents transferring real money, via their own bank account or debit card, to a children’s account. In both cases, children are given prepaid cards that they can use to buy products on the high street or online. GoHenry has teamed up with Visa, while Osper’s partner is MasterCard.
There are many ways that parents can use prepaid debit cards to teach good money habits:
- First, make sure they get a card with free online and mobile access to its balance and spending transactions. Then, put them in charge of their purchases. If they ask for something in the checkout line, have them check their balances and see if they have sufficient funds. If not, they’ll just have to save a little longer.
- Parents can also link their kids’ prepaid debit cards to their online music and gaming accounts so that those purchases are deducted from their own money. No more running up Mom and Dad’s credit cards online!
- Parents could also choose to reward their kids for patient saving by granting them “interest payments” every month or so. The more money the kids’ save and keep in their accounts, the more they get from Mom and Dad. This way they learn the value of saving over time.
The bottom line is that parents simply cannot ignore the task of training their children to handle money responsibly.