Teenagers Pocket Money

TheBanker

kimwp said:

I've just read the whole thread, it was a lovely, positive read!

Perhaps suggest the idea of regular savings - maybe putting £1-2 a week from his £10 into his savings pot?

And also an age-appropriate discussion on spending in line with his values? As an adult, this would be focussing spend (and time!) on hobbies that bring you fulfillment or help you progress in your career or save for early retirement (or whatever your goals and values are) rather than spending just because. Maybe as a 14 yo managing his fun spends, this would be thinking what brings him the most joy? 

His mum wants me to talk to him about sensible spending. I'll leave it to him to decide if he wants to try to save regularly. To be honest he won't be able to save a lot anyway which is why I am giving him the extra £30. If he can add to it, great.

kempiejon said:

When I was a 14 year old I was trying to find ways to get knives, fireworks, brandy and fags, are kids different these days?
Ah no it's OK England have the best kids at drinking and vaping.

I will not pretend I was a perfect teenager. I am sure me and my friends put enough money together to buy a packet of cigarettes once, andsomeone's older brother went into the shop to buy them for us. But we all hated them. I don't remember buying knives or fireworks. Brandy didn't feature either although at a slightly older age cider may have. Vapes hadn't been invented then.

We also didn't have mobile phones or the internet, and we were allowed to roam for miles on our bikes without anyone caring where we'd gone and the grass was always green, and the sun was always shining.....

As far as I know he's never shown an interest in knives, fireworks, brandy or fags. He confessed he's tried vaping but hated it. I am sure alcohol of some form will feature in the next few years but we'll have to cross that bridge when we come to it. (I'll be honest, the mention of knives terrifies me, but that's a different discussion on a different forum).

Emily_Joy said:

TheBanker said:

His mum has said she will give him £30 to get him started, and then £10 per week.  I have said I will also give him £30 to get him started but I will suggest he puts 'my' £30 into the savings account.

Does this all sound reasonable? Having £60 seems a lot, but it's not really. It's a chance for him to prove to his mum he can be responsible, but if he does spend it all on rubbish it's not the end of the world. 

Is there anything we've missed?

£30 is not enough to generate any interest one could possibly notice. £60 seems to be quite a lot for someone who is not used to have his own money. I would do it differently. 

I would give the lad £10 as a weekly allowance and extra £15 to get started, and say I will top up £10 next Sunday, say. Then I would explain that if there is still £10 in his account by the end of the second week (i.e. he almost stayed within his weekly allowance during the first two weeks) I would top up those £10 by extra £10, so that in a fortnight he will get £20 (£10 weekly allowance + £10 bonus). Then set up a rule: you take a look at his account every fortnight and if the boy stayed within his allowance during the last two weeks, he gets £10 bonus within the next top up. You can then change it to "stay within the allowance over 3 weeks" to get extra £15.

If all is well, a couple of months later I would consider transferring money for a pair of jeans when they are needed and tell him to go and get them himself.

This just sounds really complicated. The purpose of the £30 is not to generate interest, it's to get him used to putting money aside for planned larger expenses, or unplanned expenses. E.g. if he's invited to do something but he's already spent that week's allowance, he can decide if he wants to do it enough to use his savings. 

kimwp said:

Emily_Joy said:

TheBanker said:

His mum has said she will give him £30 to get him started, and then £10 per week.  I have said I will also give him £30 to get him started but I will suggest he puts 'my' £30 into the savings account.

Does this all sound reasonable? Having £60 seems a lot, but it's not really. It's a chance for him to prove to his mum he can be responsible, but if he does spend it all on rubbish it's not the end of the world. 

Is there anything we've missed?

£30 is not enough to generate any interest one could possibly notice. £60 seems to be quite a lot for someone who is not used to have his own money. I would do it differently. 

I would give the lad £10 as a weekly allowance and extra £15 to get started, and say I will top up £10 next Sunday, say. Then I would explain that if there is still £10 in his account by the end of the second week (i.e. he almost stayed within his weekly allowance during the first two weeks) I would top up those £10 by extra £10, so that in a fortnight he will get £20 (£10 weekly allowance + £10 bonus). Then set up a rule: you take a look at his account every fortnight and if the boy stayed within his allowance during the last two weeks, he gets £10 bonus within the next top up. You can then change it to "stay within the allowance over 3 weeks" to get extra £15.

If all is well, a couple of months later I would consider transferring money for a pair of jeans when they are needed and tell him to go and get them himself.

Honestly, this sounds a little convoluted. If he's not within his allowance, then he has run out of money and can't do any more, surely that's the learning point? This is fun money for the boy, the point is to spend it (wisely) on fun things (or save it to spend on larger fun things).

I'd maybe consider part-matching his savings as a kind of interest rate, but (and I say this as a saver), it's possible to become too focussed on saving. Maybe part matching when he spends on a larger item from his savings to help develop delayed gratification - supposed to be important for success in life. But personally I'd keep it simple.

I don't know how it will work, but I imagine his mum will part match his savings when he spends them. E.g. if he decided he wants trainers, I expect his mum will cover the cost of basic ones, and he can add extra if he wants a more expensive pair. 

theoretica said:

Sounds like he will appreciate that.  Do be careful to be realistic about how much savings will be possible from £520 a year - the bigger spends it will make possible will still be fairly small ones.

Yeah, we know he won't save much, and his mum will still pay for things for him. She can always increase the allowance too, maybe making him responsible for paying for a few more things at the same time. And he might get a bit of money for his birthday, or earn a few pounds doing odd jobs etc. 

Having said that, there will be weeks when he won't spend very much, which can even out the weeks when he spends a bit more. 

Savvy_Sue

I don't know what the best account would be: mine had NatWest accounts, which has paid off for the bank because they all still have them! At least partly because NatWest had the decent student accounts when the time came ... 

I'd just like to say Keep it Simple, and best of luck. You, OP, sound like a really great chap for this young man to have around (and I'm basing that on one of your other threads, but also this one). 

TheBanker

Savvy_Sue said:

I don't know what the best account would be: mine had NatWest accounts, which has paid off for the bank because they all still have them! At least partly because NatWest had the decent student accounts when the time came ... 

I'd just like to say Keep it Simple, and best of luck. You, OP, sound like a really great chap for this young man to have around (and I'm basing that on one of your other threads, but also this one). 

That is very kind of you to say, thank you.

I had a look at Natwest because I have accounts with them and have always found them to be a very good bank, but it looks like their teenager account is only available to people whose parents bank with Natwest. Also it looks like they can't make Faster Payments until they're 18. So ruled that one out for now.

Most of his friends have bank accounts and get between £10 - £20 transferred in each week from parents. He hasn't expressed a preference for any particular bank but he wants to be able to use Google Pay and be able to send payments to his friends.

 He's obviously been paying attention to me as he asked if he'll be able to earn cashback on his spends (he asked me why I have several cards and sometimes use different ones - the answer is I use the one that will pay the most cashback for that particular transaction).

Savvy_Sue

Sounds like he'll go far ...

Kim_13

Emily_Joy said:

TheBanker said:

His mum has said she will give him £30 to get him started, and then £10 per week.  I have said I will also give him £30 to get him started but I will suggest he puts 'my' £30 into the savings account.

Does this all sound reasonable? Having £60 seems a lot, but it's not really. It's a chance for him to prove to his mum he can be responsible, but if he does spend it all on rubbish it's not the end of the world. 

Is there anything we've missed?

£30 is not enough to generate any interest one could possibly notice. £60 seems to be quite a lot for someone who is not used to have his own money. I would do it differently. 

I would give the lad £10 as a weekly allowance and extra £15 to get started, and say I will top up £10 next Sunday, say. Then I would explain that if there is still £10 in his account by the end of the second week (i.e. he almost stayed within his weekly allowance during the first two weeks) I would top up those £10 by extra £10, so that in a fortnight he will get £20 (£10 weekly allowance + £10 bonus). Then set up a rule: you take a look at his account every fortnight and if the boy stayed within his allowance during the last two weeks, he gets £10 bonus within the next top up. You can then change it to "stay within the allowance over 3 weeks" to get extra £15.

If all is well, a couple of months later I would consider transferring money for a pair of jeans when they are needed and tell him to go and get them himself.

I would add that while £30 isn't a lot, £30 is what mum has decided upon to get him started (which is massive progress from where the thread started.) OP would be overstepping the mark if he offered any more than to match it to get him started with saving, as the lad isn't his child.  

£30 and then £10 per week seems reasonable given the categories of expenditure he is expected to take responsibility for, and can be amended as necessary as he gets a bit older/proves that he can manage his budget (possibly a monthly allowance rather than weekly eventually as that's how he will most likely be paid once he starts working.)

They probably don't want to generate much interest, as anything over £100 per year would impact mum's PSA/be taxed at her usual rate.

I'm sure you'll introduce him to Regular Savers when the time is right, and the monthly limits can be as much of a motivator as the interest rate. Nationwide used to have a good one for children, but not sure if they still do. Though opening one away from his current account might mean it was less likely to be dipped into as it would be out of sight.

Edited to add: Perhaps no need to worry on the last point, someone already asking about cashback at 14 is very likely to be a saver.

Savvy_Sue

Kim_13 said:

Emily_Joy said:

They probably don't want to generate much interest, as anything over £100 per year would impact mum's PSA/be taxed at her usual rate.

Really? I thought children had their own PSA / tax-free income allowance. 

Kim_13

Savvy_Sue said:

Kim_13 said:

Emily_Joy said:

They probably don't want to generate much interest, as anything over £100 per year would impact mum's PSA/be taxed at her usual rate.

Really? I thought children had their own PSA / tax-free income allowance. 

https://www.moneysavingexpert.com/savings/child-savings-tax-free/ (Point 5)

They do, when the money isn’t from parents (they also mention step parent, so they may find HMRC, rightly or wrongly, trying to include mum’s partner in the same group if it came to that.) It’s obviously been set up that way to try to prevent adults from using a child to avoid tax on their own savings interest. 

TheBanker

Kim_13 said:

Savvy_Sue said:

Kim_13 said:

Emily_Joy said:

They probably don't want to generate much interest, as anything over £100 per year would impact mum's PSA/be taxed at her usual rate.

Really? I thought children had their own PSA / tax-free income allowance. 

https://www.moneysavingexpert.com/savings/child-savings-tax-free/ (Point 5)

They do, when the money isn’t from parents (they also mention step parent, so they may find HMRC, rightly or wrongly, trying to include mum’s partner in the same group if it came to that.) It’s obviously been set up that way to try to prevent adults from using a child to avoid tax on their own savings interest. 

I doubt thiss will be a problem as he won't make much interest (if he did then we would probably move the money to a JISA). But I am curious about HMRC would treat money I give him. I don't think of myself as his step-parent, he doesn't ever refer to me as his step-dad, I am not married to his mum, we don't live in the same house, and he is not financially dependent on me. So in the extremely unlikely even that he manages to generate £100 interest from money I give him, I think we'll be ok.  

Grumpy_chap

TheBanker said:

His mum has said she will give him £30 to get him started, and then £10 per week. From this he needs to pay for any social activities e.g. cinema trips or going to town with his friends, as well as any food or drinks he wants while he's out. He'll need to save himself for any bigger 'wants' (although he will still get Christmas and Birthday gifts). Mum will still pay for basic clothes, phone, football sessions, school lunch, school bus pass, school trips and anything else related to school e.g. stationery and revision guides. If he wants 'designer' (i.e. non basic) clothes or trainers then he has to save up for these. 

I have said I will also give him £30 to get him started but I will suggest he puts 'my' £30 into the savings account and keeps it back for unplanned expenses and tries to add to it so he's got some money for bigger purchases e.g computer games or trainers. 

This is an important step as it is never to young to learn about budgeting.

I am just unclear as to whether the £10 per week is sufficient to meet all his "wants" (without being extravagant) is that is to cover social activities plus trainers and such like.

You mentioned that this week he went to the cinema.  I just checked online and the price for a single seat at the cinema is as follows:
 - Cineworld £9.99
 - Odeon £14.49
 - Vue £7.99 (£5.99 restricted view)
He will certainly learn the need to budget with £10 weekly versus those market rates.  He may need to investigate student discount cards / membership schemes etc.  He will need to understand that a drink from the supermarket taken into the cinema is better value than purchased in the foyer, subject to being able to smuggle the drink in.

If he is to hold some of the weekly £10 back for trainers etc., the budgeting becomes more challenging, possibly to the extent of impossible.

There is a lot to be said that he learns to budget and does not take the cinema for granted, so it is maybe once a month, but does he have enough charisma to carry his friends with him for lower cost activities?

He will need some good advice to budget appropriately with the £10 weekly, so that this does not all backfire and achieve the exact opposite of the desired outcome.

LunaCatty

My 10 year old has had pocket money for the last two years. Currently £25 per month. There are some ground rules though such as no sweets/junk food - we have the odd treat like haribo in so he isn't deprived It started as I got fed up every time in the supermarket he'd ask for a lego magazine (now £7 a pop!) or small toy so I figured time to give him a bit more control on spending.

Once he turns 13 my plan is to increase the allowance and add in he buys his own clothing/shoes with it too and as he gets older gradually add more money to his control as well as financial  responsibilities. He now tends to save a few months up to get something bigger that he wants, so he's working on the benefits of delayed gratification and savings. We have a starling bank account and his account/card is attached to it so I know what he spends on, but he loves having his own bank card and control of his money.

Birthday and Christmas money also goes into the same account for him. Sometimes he knows what he wants to use if for and it is gone straight away. Other times it can sit for 6 months whilst he decides what to spend it on.

He became a lot more conscious of the price of things once he valued the money as his and tracked his balance instead of the more abstract with me/my husband paying.