Pocket money ‘not an essential’

At a time when debt and strained household budgets are a fact of life for many people, consumers might wish to think carefully about the pocket money allowances their children get.

Parenting journalist and author of Raising Children: The Primary Years, Liat Hughes Joshi, said that at a time of hardship it is still difficult for children to appreciate these issues, even if they hear their parents talking about it a lot.

She stated: "One of the points of giving pocket money is to help children understand the value of money. I'd hope that in the longer term, providing a small amount would mean they gain a better appreciation of their parents' situation if money was tight."

Moreover, she added: "If you can't afford to give pocket money or would rather not do so, there's no rule that you have to," noting that not all children do receive this.

Ms Joshi stated that if her son started taking his pocket money for granted or being ungrateful about it she would consider withdrawing it, no matter what the state of her own finances. 

Not giving out pocket money when hard up may be one way in which parents who are struggling can save a little money, but those in significant debt might find they need a comprehensive solution, such as a debt management plan.

And for those owing £15,000 or more an individual voluntary arrangement (IVA) may be the best way forward, as people who cannot pay the debt they are in might benefit from a deal that sees their monthly payments substantially reduced.

An IVA can take effect once 75 per cent of creditors agree to the deal and payments are made over a period of five years or less, after which any remaining debt is written off.

Many consumers will be reassessing their finances following the recent Budget, with a poll by Which? revealing 73 per cent feeling they would be no better off after chancellor George Osborne's speech. 

By James Francis