Anybody who has visited the dentist recently knows that teeth aren’t cheap.
However, research from Halifax suggests that teeth are now worth less to the tooth fairy than they previously were, with an average amount of £3.34 per tooth being left under a pillow. This is down from £5.76 per tooth that parents received when they were children.
A continued decline at this rate would see the tooth fairy facing extinction in as little as 40 years; an unthinkable prospect for many. Until that happens, it still puts money in the hands of children, where it has a tendency not to remain for long.
Any article involving the tooth fairy will admittedly be light-hearted in nature, but it does raise a serious point. Children rarely receive a financial education in school, so giving them a basic understanding of money when they are young could put them in good stead for the future.
So, with a mouthful of teeth to bargain with, how are children spending their money? And is the tooth fairy the perfect way to introduce your child to the concept of saving?
A £450 million industry
Teeth are big business for children. They can expect an average of £66.80 for a mouthful of 20 milk teeth. This can vary by region, with:
- Greater London seeing an average of £4.84 per tooth (or £96.80 per mouthful)
- The North West seeing an average of £2.65 per tooth (or £53 per mouthful)
Giles Martin, Head of Savings at Halifax, said: “Kids shouldn’t bank on the tooth fairy
forever. These surprising results show the going rate is getting lower. At this rate, they’ll be
worthless 40 years from now, paving the way for the extinction of the tooth fairy as soon as
2060. The good news is that two thirds of children save the money they get from the tooth fairy, either in a piggy bank or a savings account. Just like regular pocket money, it’s a great opportunity to get kids into the savings habit from a young age.”
How are children spending their money?
Not surprisingly, the preferred way to utilise tooth fairy money is a combination of sweets and toys. This fact may be responsible for data that shows that twice as many under-10s received hospital treatment for tooth decay than broken arms in 2016 (Source: NHS).
However, on a much more positive note, nearly 70% of children do put some money into savings.
Where can children keep their savings?
The options available to children are similar to the savings options for adults. Interest rates tend to be higher than comparable accounts for adults, making them a great place for children to deposit any money the tooth fairy may leave under their pillow.
There are plenty of choices out there:
Easy access savings accounts: If you want your child to be actively involved with saving, an easy access account is a good starting point. As with adult easy access products, the interest rate tends to be lower than regular savings, or fixed-rate accounts. They do, however, offer far more protection than the humble piggy bank.
Regular savings accounts: If you want to pay a regular amount in each month, this option could offer a better interest rate than a standard savings account. Though, it might not be a suitable place for any tooth fairy earnings unless your child is lucky (or unlucky!) enough to lose a tooth each month.
Children’s current accounts: Whilst most banks only offer child accounts from the age of 11 upwards, they can be a great way to introduce children to banking. Working in a similar way to standard current accounts, they allow children to pay money into an account and make withdrawals either in-branch or using a debit card. The biggest difference is usually the absence of an overdraft, meaning no money can be borrowed, and more importantly, no fees or interest charges can be accrued.
Junior ISAs: Most children won’t have enough teeth to take advantage of it, but a Junior ISA offers an annual allowance of £4,128 for the 2017/18 tax year. Available in both Cash and Stocks & Shares variants, Junior ISAs offer tax-free returns for anybody under the age of 18.
What is the best option?
As with all financial decisions, the right choice completely depends on personal circumstances. For example, if your child wishes to put the money away for the long term, Junior ISAs can offer interest rates upwards of 3%, which is far more competitive than their adult counterparts. If instant access is required, it’s safe to say that an easy access savings account is a better option.
Regardless of which option your child goes for, it is a great opportunity to get them into the habit of saving from a young age. Being financially literate has never been more important, and with one in four UK families having less than £95 saved for an emergency, it is something that will bode well for them, in later life.
For more information about savings, whether that be for your child or yourself, we’re here to help. Call Sarah or Bev on 0115 933 8433 or email firstname.lastname@example.org.