Four out of five Australian children aged nine to 13 receive pocket money and the going rate for that age group is between $5 and $19 a week, new research suggests.
In that respect, Sahara Hillman-Varma is a typical 11-year-old, receiving $10 a week from her mum, Carin Hillman.
Less usual is the fact Sahara receives her pocket money through Spriggy, a digital app with a debit card attached.
“She’s learning how to use money the way we [adults] use it and the way she’ll have to use it in the future,” Ms Hillman said. “She understands the distinction between a credit card and a debit card ... I’m glad she will have knowledge of plastic that I wish I’d had when I was younger.”
Sahara, who lives in Liberty Grove in Sydney’s inner west, is a golf prodigy who has represented Australia in international competitions. Previously her parents paid for her golf gear, but they plan to teach their daughter financial skills by letting her save up and buy equipment online herself.
“There is a chance that one day she’ll be looking at a serious sponsorship or prize money and I don’t want her to get in over her head - or get a big head,” Ms Hillman said.
More than seven out of 10 Australian children over the age of four receive pocket money, according to the survey of more than 1000 parents for the Financial Planning Association’s Share the Dream: Raising the Invisible-Money Generation report.
Nearly two out of three young children, aged four to eight, receive pocket money, typically under $10 a week. And more than seven out of 10 older teenagers, aged 14-18, receive pocket money, usually between $10 and $39 a week – though some have part-time jobs instead.
Thirty-six per cent of children spend their money on small day-to-day purchases, while the same percentage save their money for no particular reason. The remaining 28 per cent are diligent in saving up to buy larger items.
Nearly two out of five parents say their children favour intangible purchases such as apps, games, movies or experiences.
FPA chief executive Dante De Gori said pocket money taught children financial skills such as making trade-offs with their spending decisions, and he believed it was important they earn the money in some way.
But two out of three parents are worried digital money – online transactions, credit and debit cards, and ‘tap and go’ payments – make it harder for children to grasp the value of real money, the research found.
“Parents are saying they are finding it more difficult and they believe that as a result of the digital environment their children will be worse off,” Mr De Gori said.
Spriggy founder Mario Hasanakos said this was why he founded his business 18 months ago. So far 125,000 parents and kids -about 45,000 families – have signed up.
“It’s harder and harder for parents to teach children about money in an increasingly digital world,” Mr Hasanakos said. “When I was growing up pocket money in money boxes was our world, but these days more and more of what children want to buy is online.”
Spriggy has received $6 million to date in funding from investors, including Alium Capital and Atlassian co-founder Mike Cannon-Brookes’ investment company Grok Ventures.
Families pay a fee to use the service of $30 a year for each child.
“It’s a tool parents can use to teach their children about money and we think it’s a small price to pay,” Mr Hasanakos said. “We are entirely independent, not owned or controlled by a bank. It’s just an honest fee for a service you can’t get anywhere else in Australia.”
Spriggy recently opened up to six and seven-year-olds and will add a “Tasks and Chores” feature in early October. The company also plans to allow more than one parent log-in to help blended and separated families. Ms Hillman, who is divorced, said she would offer this to Sahara’s dad.
Sahara is expected to look after the dog and maintain her golf equipment, but this is not tied directly to her pocket money. She has used Spriggy for about six months, including at the Sydney Royal Easter Show earlier this year.
“I’ve learnt that you can’t just blow money all the time because you officially have a limit you can’t spend over, you have to use it wisely,” Sahara said. “I used $20 for my mum’s Mother’s Day present but I haven’t used it for golf yet because I’m still trying to decide what to save up for.”
Last week Financial Services Minister Kelly O’Dwyer launched the 2018 National Financial Capability Strategy.
If financial capability levels for all Australians were lifted marginally, there would be a $212 billion (in 2017 dollars) increase to consumer wealth and consumption over the next 30 years, according to modelling from the Australian Securities and Investments Commission.
More than one in three Australian adults find dealing with money stressful and overwhelming, ASIC research suggests.