- Rising costs of goods and services has prompted more than half (54%) of parents who give their child pocket money to increase their allowance
- 81% of parents who give their child pocket money want their child to save some of this money each week
- Virgin Money launches M Power, a brand-new youth account to support financial independence
Pocket money is on the rise and remains a fundamental way to instil positive financial habits from a young age according to a new survey* of 2,000 UK parents with children aged 8-16. Three quarters of parents (76%) give their child pocket money, with the average weekly amount reaching £9.33. Reflecting inflationary pressures, more than half of parents (54%) who give pocket money admit they have increased the amount of pocket money they give to their child due to the rising cost of goods and services.
The insights coincide with the launch of M Power, a brand-new Virgin Money bank account for 11-17 year olds (customers must be aged between 11-15 years old at the time of application), available exclusively to the children of Virgin Money current account customers. M Power, which has been created in partnership with Mastercard, is designed for savvy young savers and spenders alike, with no monthly fee, fee-free spending in the UK and abroad, a dedicated app and a distinctive red debit card made from recycled plastic. It pays 1.00% AER interest on current account balances up to £1,000**, with a linked M Power Saver account offering 2.50% AER on balances up to £25,000. The app is packed full of smart features, such as the ability to freeze a misplaced card and set up savings pots for the things that matter.
As well as providing children their own bank account to develop their money management skills, parents and guardians still retain an element of control for peace of mind, with features like real-time spending alerts and oversight of their children’s finances – supporting their growing independence and empowerment while spending and saving safely.
Graeme Sands, head of personal banking at Virgin Money, said: “We want to introduce Virgin Money to a whole new audience with M Power, an account for kids and teenagers who want to spend, save and manage their money digitally while building financial independence. Our research found that 81% of parents want their child to save some of their allowance each week, and M Power, with its linked savings account, will help kickstart money management skills for Generation Alpha, building healthy saving and spending habits for their futures.
“M Power is packed with features that cater for digitally-savvy customers who have big dreams and even bigger expectations, while also giving parents and guardians the tools they need to guide them.”
The account reflects the sentiment of survey respondents, who when asked about the reason for giving pocket money, cited the importance of their child learning about money and budgeting from a young age (61%), and because they want their child to be in control of their spending and understand the value of money (58%).
In order to open an M Power account, parents or guardians of the child will need to complete a quick and straightforward application via the Virgin Money mobile banking app, with the option of up to five free M Power accounts linked to their Virgin Money current account. Parents and guardians able to view their child’s account within their Virgin Money mobile banking app, give the child’s account a nickname, set up spending alerts and see when, where and how much their child or children are spending. This visibility can be removed by the child once they are over 16 years old, or before by the parent/guardian if they would like to do so.
While creating the M Power account, Virgin Money and Mastercard undertook extensive market research – both externally and with colleagues and their children – to help develop and tailor the product to their needs, from the M Power name and debit card design to communications and the welcome journey, which has been designed with young people in mind.
Key features of the M Power account:
- Parental control: With a clear view of spending and saving activity within the Virgin Money mobile banking app, parents/guardians are able to actively guide their children’s financial journey while maintaining oversight.
- Spending alerts: Parents/guardians can set optional real-time spending alerts, allowing them to monitor their child’s transactions. This feature encourages open conversations about money and helps children understand their spending habits.
- Safe spending: M Power accounts do not offer overdraft facilities, ensuring that younger savers learn to manage within their means. Additionally, spending on certain over-18 websites, such as gambling websites, is automatically blocked.
- Card freeze: Worried about a lost or misplaced debit card? Parents/guardians and children can freeze and unfreeze the M Power debit card directly from the app, providing peace of mind.
- Fee free spending at home and abroad: M Power charges zero fees on spending, both in the UK and overseas, ensuring that young account holders can focus on saving and learning about money without having to deal with any unexpected costs.
- Seamless transition: When the child turns 18, Virgin Money graduates them to the M Plus Account. The M Plus Account comes with a range of features and benefits, including the linked M Plus Saver to help them continue their saving goals.
Click here to find out more about Virgin Money’s M Power account.
*About the research: The survey was carried out by OnePoll in June 2024 with 2,000 UK parents of children aged between 8 and 16 years old.
** 1.00% AER (1.00% gross per annum variable) interest rate, paid monthly, on M Power Account balances up to £1,000. This rate applies from 1 August 2024. Until then customers will receive 2.02% AER (2.00% gross per annum variable) on balances up to £1,000.
Full T&Cs here.