A recent study by Santander revealed that even children are feeling the pinch of inflation, with nearly half of children between the ages of 10 and 16 having their pocket money significantly reduced.
With spending down throughout the country, it seems only natural that children also have smaller amounts of spending money as their parents try to find ways to meet the costs of living and stay out of debt.
The affect on children is, of course, a direct reflection of the affect of rising inflation on families’ budgets. Many children’s weekly allowances have been stopped completely, and others have been told to get jobs of their own.
However, with a fall in spending comes an opportunity to teach your children about saving. By teaching your children about saving, and fostering good savings habits in them, you can be sure that they understand how to spend wisely.
Opening up a children’s saving account in their name means that they can get early experience in planning their own finances. It also means that parents, knowing that their children will be saving and not spending their money on toys or snacks, can feel more comfortable giving their children a small piece of the household budget.
Setting an example
However, this also means that parents will need to set a good example for their children by practicing what they preach, and setting aside small sums of money early and often.
It is also extremely important to keep an eye on the rates that your child’s savings account offers, as banks and building societies have recently come under fire for offering discouragingly low interest.
Schemes affiliated with football clubs were the worst offenders, with some offering as low as 0.1% returns on children’s money.
This means it is important to be active when helping your child manage their savings; don’t be afraid to move their money to accounts with better returns, and to keep up to date with their provider’s rates.
This, in turn, will teach your children to keep a watchful eye on their savings – a lesson that can last them a lifetime.