- Youngsters earn £5,017 by the time they reach 16 years of age
- Almost half of kids currently have a side business to earn extra cash
- Nearly half of parents say their children understand the idea of saving, but rarely do it
- Our entrepreneurs of the future need educating on cash flow management, as this issue is blamed by two thirds of small businesses who fold in first five years
New research has revealed that children as young as seven years old are receiving an average of £570 a year (£11 a week) in ‘earnings’, and almost half (49 percent) currently have a side business to earn extra cash.
With last year seeing an increase of 2 million small businesses since the year 2000, it’s no wonder almost one third (32 percent) of kids in the UK admit that when they grow up they want to own a business of their own; with a Blogger/Vlogger (8.5 percent) being the most popular business choice.
Though the research shows that entrepreneurial spirit amongst children is high, when it comes to budgeting and accounting, it seems the kids of today need to be educated on the importance of these areas if they want to be business leaders of tomorrow. Almost half of parents (49 percent) admit their children understand the idea of saving money but rarely do it, and a quarter of parents (26 percent) admit their child spends their money as soon as they get it.
With poor cash flow management cited as the reason why two thirds of small businesses (65 percent) fail in the first five years of trading, and 27 percent of small business owners admitting they don’t keep track of the time and materials spent on a client’s assignment, cloud accounting software company, Xero, is calling for our small business owners of the future to be taught basic accounting skills so these issues can become a thing of the past.
The Making Cash Flow Child’s Play initiative, which is supported by consumer champion, BBC Dragon and mum of four, Sarah Willingham, launches with a short film led by a ‘child accountant’ teaching some of the cash flow fundamentals to the entrepreneurs of the future. The child’s-eye-view film covers cash flow topics including invoicing, client relationships, information management, payment terms and methods.
The research of over 2,000 six to 12 year olds and their parents reveals that the average child will earn £570 a year through pocket money, good grades and monetary gifts from relatives. Most mums and dads (75 percent) say their child must earn their pocket money through chores; the highest paying of these being getting good grades, followed by washing the car, tidying your room, helping to clean the house and helping with the gardening.
While pocket money can bring in around £200 per year, three quarters (74 percent) of parents say their kids have an interest in making extra money outside of the home; with almost half (49 percent) admitting their child has a side ‘business’ that earns them an extra £113 a year. The most popular money earners for young people are: selling old toys on eBay (38 percent), selling chocolate/sweets at school (25 percent) and cleaning neighbours’ cars (21 percent).
The top 10 ways kids make extra cash in order of popularity are:
- Selling old toys/belongings on eBay (38%)
- Selling things at school (25%)
- Cleaning neighbours’ cars (21%)
- Doing a paper round (19%)
- Mowing/watering neighbours’ gardens (16%)
- Babysitting (13%)
- Saturday job (12%)
- Cleaning for neighbours/relatives (11.2%)
- Walking dogs (11.1%)
- Charging for technical support (3%)
While kids are clearly savvy when it comes to earning money, it seems they aren’t so shrewd when it comes to saving their earnings. Most parents (49 percent) admit their children understand the idea of saving, but rarely do it. One quarter (26 percent) admit their child spends their money as soon as they get it; almost half (49%) say their kids put their pocket money into a money box, but spend it a short while later; and just 5% say they put their money into a savings account. It does appear boys are better at saving money than girls though; with 28 percent of boys admitting they always save their pocket money, compared to 23 percent of girls.
Sarah Willingham commented: “The small business economy is flourishing, and it’s more important than ever that the 5.4 million SMBs in the UK are set up to succeed. It’s so encouraging to see from Xero’s research that an increasing number of young children are showing entrepreneurial spirit, whether that be completing chores to earn some extra cash or selling sweets at school for a, sometimes substantial, income.
“I’m excited to learn from the research that almost one third of kids would like to own their own business when they grow up, eyeing up all sorts of careers from being a blogger to an app developer. And as a mother of four, I think it’s essential that we teach children about the importance of good budgeting and the basic principles of sound money management from an early age to set them up for the future.”
Xero’s Director, Small Business, Darren Upson comments, “It’s great to see so many kids in the UK aspire to be their own boss in the future. Their digital mindset, ingrained from growing up in a technology rich environment will cascade through to the workplace and will benefit all types of business, helping evolve traditional businesses into the modern era. As proven by this research, with the right tools and habits, managing cash flow can be so easy – whether you’re a business owner of today or an aspiring business leader of tomorrow.”