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Commonwealth Bank welcomes improved banking sector Code of Practice

Media release

CommBank can

Media release

Australian pocket money economy sits at $1.4 billion per annum

04 February 2013 – As children around the country start a new school term, Commonwealth Bank has looked at how Aussie children earn, spend and save money and, most importantly, how they learn about the value of it.

It is never too early for a child to learn about the value of money and how to budget and save. By taking the time to teach children how to save money from a very young age, parents lay the foundations of a valuable life skill. And pocket money is the primary education tool that parents use to do this, contributing to a pocket money economy of $1.4 billion per annum.

The pocket money economy

Commonwealth Bank’s research found that almost 80 per cent of parents give their children pocket money, with the average child receiving their pocket money just after the age of six. Children aged 4 – 15 years are currently receiving an average of $10.17 of pocket money per week. As demonstrated in the table below, pocket money is directly proportional to age. Generally, the older a child gets, the more likely they are to receive pocket money and the higher the amount.

Age

% of children that receive pocket money

Average amount of pocket money per week

4 – 6 years

55%

$7.17

7 – 9 years

77%

$7.04

10 – 12 years

84%

$11.37

13 – 15 years

82%

$14.11

Surprisingly, when looking at how pocket money has increased over the years, children today are not necessarily financially better off than their parents. When the parents in our survey were children, they received an average of $3.19 per week. This is $6.98 less than what their children are receiving now, meaning the average increase in pocket money per annum is 3.7 per cent, below the inflation rate over the past 30 years, which averages 4.2 per cent. 

More than four in five (81 per cent) parents believe that children do not understand the value of money unless they earn it, which is why pocket money is largely given in exchange for work. Seventy-one per cent of Aussie children are expected to do some household chores, such as tidying their bedroom or washing the dishes, to receive pocket money, despite 92 per cent of parents believing that chores should be done regardless of a ‘reward’.

It’s not just pocket money that’s flooding in – 68 per cent of children look to additional sources outside their pocket money allocation, the most popular being through presents (45 per cent), the tooth fairy (27 per cent), or as a reward for good marks at school (13 per cent). In fact, Aussie kids earned an average of $276.18 in the last 12 months from additional sources outside pocket money! And it’s boys ($296.60) who are earning more than girls ($255.09).

David Cohen, Director of the Commonwealth Bank Foundation, the Group's financial literacy arm, which delivers the Bank's award-winning StartSmart workshops amongst other programs, agrees that pocket money is a fantastic financial education tool.

“I believe it is beneficial to introduce children to situations where they are dealing with real money – regardless of how small the amount – and a great way to do this is by slowly introducing them to pocket money. By doing this you can teach your children how to budget, how to save towards something they really want, the value of earning money, and also the benefits of saving vs. spending. A financially literate generation of children will inevitably lead to a more prosperous society, so these are invaluable life skills,” he said.

Aussie children's spending and saving habits

The concept of saving is considered important by Aussie parents. 76 per cent of parents constantly tell their children the importance of saving for a rainy day. But while parents are actively encouraging this, few (30 per cent) children actually do so most or all of the time. One in three children (33 per cent) hardly ever or never put their pocket money into their bank account.

In terms of spending, Aussie children are most likely to spend their money on food, snacks and lollies. This is followed by going out, clothes, presents for friends and family, music downloads, internet access, transportation and mobile phones.

Parents' perspective on financial education

With almost all (94 per cent) Aussie parents believing that children develop the majority of their attitudes towards money from their parents, there is a certain amount of pressure placed on parents to set a good example when it comes to spending and saving.

Interestingly, although children are seeing less and less cash exchanges on a daily basis due to the increasing dominance of card payments and online and mobile banking, parents are using more traditional measures to educate their children about money.

The most common ways are simply talking about money (73 per cent), giving their children a money box (64 per cent), opening a bank account for them (56 per cent), giving financial incentives to undertake chores (50 per cent), playing educational games (45 per cent), and taking them shopping to demonstrate how to stick to a budget (43 per cent).

Almost 60 per cent of parents consider their children to be financially savvy; in fact almost a quarter (24 per cent) believe their children manage their finances better than they do! Despite this, the vast majority of parents (79 per cent) believe they could improve on how they teach their children about money management.

Mr. Cohen concludes, “We have a proud 80 year history of providing financial education programs for young Australians with the aim of improving the nation’s financial literacy. This research, along with the work we do with thousands of parents and teachers around the country, tells us that by taking the time to teach children how to save money from a young age, we provide them with money management skills they’ll use for the rest of their lives, which will lead to a more prosperous society.” 

To find out more about how Commonwealth Bank supports teaching children to save, visit: www.commbank.com.au/schoolbanking or visit your local branch or School Banking Specialist.

- ENDS -

 

 

Media contact:

Sarah Gibbons,
Commonwealth Bank
E sarah.gibbons@cba.com.au
T (02) 9118 1706
M 0403 681 515  

Note to editors:

  • The study was conducted among 1,023 Australians aged 18 years and over and who are a parent of a child/children aged 4 – 15 years.
  • Surveys were distributed throughout Australia including both capital city and non-capital city areas.
  • Fieldwork commenced on Friday, January 11 and was completed on Monday, January 21, 2013.
  • This study was conducted online amongst members of a permission-based panel.
  • After interviewing, data was weighted to the latest population estimates sourced from the Australian Bureau of Statistics.