Survey: Lithuanian parents most often give their children 1-2 euros of pocket money a day

As a new school year approaches, parents’ wallets will soon feel the pinch not only of all the direct costs involved in sending their kids to school, but also of the pocket money children need for small everyday expenses. Experts say pocket money is also a great practical way to teach children to manage their money and develop financial literacy.

In Lithuania, 44% of parents with children age 7-18 provide them with 1-2 euros a day, 33% give them 2-5 euros, and 15% – less than 1 euro. Another 3% say they give their kids 5-10 euros for their needs every day, and 5% of parents don’t provide any pocket money. That was shown by a May 2018 representative survey of the country’s residents by Spinter Tyrimai for INVL Asset Management, one of Lithuania’s leading asset management companies.

According to the survey, people in higher income groups and parents with older children give their kids larger amounts of pocket money.

“The survey revealed that the vast majority of parents try to give their children pocket money. The amounts vary, but we can clearly see that kids in Lithuania most often get 1-2 euros a day for their needs. That’s a positive trend, since when children get money for small expenses they’re able to start learning to manage their money independently,” said Dr Dalia Kolmatsui, Head of Pension Funds & Retail at INVL Asset Management.

The financial expert advises parents to also take an active role in helping children plan their finances, giving them advice on how to allocate their money, and letting them experience what types of consequences and results financial decisions have. She said the amount children get should not be very big, but that it is also not good if they do not get any pocket money at all. “When they get a certain amount of money every day, children are able to start planning what, where and when they’ll use it for and maybe set some of it aside to save up,” Dr Kolmatsui said.

In order to better develop financial literacy, it is recommended giving a child a larger amount of money for appropriate period at once. That way the child can learn to allocate the money they have for a variety of goals and see the consequences of their decisions.

“Of course, you can’t really start by giving them the amount for a whole month. But you can gradually increase how much pocket money you give a child: starting, say, with the amount for one day, then increasing it to a week’s worth of pocket money, and later giving them the money for a whole month all at once,” Dr Kolmatsui suggested.

When children learn the lessons of financial planning early, she said, they grow up knowing how to manage their money much better. “On receiving a salary, they’ll know how to allocate it across their various everyday needs, save some for bigger purchases, and invest some and set it aside for the future. They’ll also find it much easier to learn more later on about financial instruments they can use to develop strong financial foundations for themselves and their family,”Dr Kolmatsui said.

Spinter Tyrimai, on behalf of INVL Asset Management, conducted the representative survey of Lithuanian residents’ investment and saving habits in May 2018. For the survey, 1005 people aged 18-75 were interviewed.

INVL Asset Management, which is part of the Invalda INVL group, manages 2nd and 3rd pillar pension funds and mutual funds as well as alternative investments and individual portfolios. Over 190 000 clients in Lithuania and Latvia and international investors have entrusted the Invalda INVL group’s companies with the management of more than 600 million euros of assets.

Note: When referencing these survey results, please specify the source.