Pocket Money, Savings & Allowances

Author:FosterWiki
Published:March 2023
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Pocket Money, Savings & Allowances

“When we did the research for this page the disparities across different providers on the amount of pocket money, savings, allowances, policies and how these were implemented were vast, they even varied within providers.

The pocket money, allowances and eventual savings for those leaving care may seem like a bit of a postcode lottery and there is inadequate information or guidance for foster carers. We hope this guide will empower foster carers to ensure they get the correct policies and information they need.”

Sarah Anderson, Founder, FosterWiki

Introduction to Pocket Money, Savings & Allowances

Like many things pocket money, allowances, savings and policies vary from provider to provider due to the devolved nature of foster care.

This guide is designed to give foster carers information on how it works, with tips and guidance from experts in foster care and includes foster carers’ comments from around the UK to illustrate how it works in practice.

What the National Minimum Standards (NMS), the guidance underpinning fostering:

providers on pocket money, savings & allowances policies say:
2.5 Children exercise choice and independence in the clothes and personal requisites that they buy and have these needs met, within the context of the foster family’s decision-making and the reasonable limits that a responsible parent would set.
2.7 Children receive a personal allowance appropriate to their age and understanding, that is consistent with their placement plan.

Children are supported to develop financial capability, knowledge and skills.

As you can see there is no consistent standardised national policy for looked-after children’s pocket money, allowances and savings, it is very much left to each fostering provider.

Our role as foster carers is to contribute to the education of our children and young people on how to budget, manage their money and save, this is essential for their futures.

Pocket money, allowances and savings, unless otherwise specified come out of the child’s allowance element paid to the foster carer.

How does it work?

Every fostering service should have a policy on pocket money, allowances and savings, if you have not got one ask your supervising social worker (link worker) for it.

Your fostering services should provide you with their policies on pocket money, allowances and savings, this should also be discussed in care plans, placement plans, supervision and with children’s social workers.

IMPORTANT: Whilst this page serves as a guide the most important thing is to source and follow your fostering service’s policy on pocket money, savings, allowances and children’s bank accounts.

Don’t do anything off your own bat make sure you work with the team, follow policies, and care plans, get things in writing and always follow National Minimum Standards.

Pocket money

Pocket money is exactly what it says, and the child or young person should be allowed to use this in the way they chose, they should also be clear about how much it is (age appropriate) and when and how they receive it.

However, as foster carers, it is part of our role to educate our children and young people about basic budgeting skills and savings.

Your fostering services should provide you with their pocket money policy and this should also be discussed in care plans, placement plans and supervision.

The policy will often be accompanied by a chart like the one below, although amounts will vary from provider to provider.

Some policies include the possibility of earning extra money for doing chores or as an incentive or reward for things like tidying their rooms or doing well at school, however, this is something you must ensure is approved by your provider and that approval is recorded in writing.

Withholding pocket money for any reason varies in policies across fostering services, check your service policy, and if you are withholding pocket money for any reason and it is within the policy remit it is also a good idea to put it in writing to your and the child’s social worker for them to agree (in writing) to you.

If the child has their pocket money in cash then provide them with a cash box or piggy bank.

Top Tip: Make sure if you want to withhold pocket money for any reason you have got it authorised by your and the child’s social worker or it is clearly written in your fostering service’s pocket money/ allowances/savings policy. Doing this without permission can result in standards of care or allegations.

Top Tip: It helps to be clear and boundaried with children and young people about when and how they get their pocket money/allowances.

An experienced member of the FosterWiki team says this:

“Over the years I learnt to be very boundaried about pocket money and allowances, especially with our older children and young people.

In fact, we now have the conversation when they first join our family, and we expand that their pocket money/allowance goes into their bank every Friday morning and we won’t give them any advances or loans, this is simply because if you do it once you will set a precedence and cause issues if you then refuse the next time.

It’s an important part of our role to help them learn to budget and save so we don’t do it, but clarity and sticking to it are important. Of course, we give them money for special occasions, birthdays and maybe some extra things but we are very specific about what it is for.”

Top Tip: It can be challenging if a foster child gets much more pocket money or allowance than your own children and can create issues. Sometimes services will allow you to allow the child’s pocket money to fall in line with your children’s amount, and the balance is deposited into the child’s savings account.

However, it is really important you discuss this with the child and your social worker and have a written agreement to this. If this isn’t possible then have a conversation with your own children as to why the foster child is getting more money than them, so they understand, that discussion can be framed in many ways.

Personal allowance

Once a child turns 16yrs they will go from pocket money to an ‘Allowance’, this is to cover things like mobile credit, personal toiletries, activities or going out. They could also be used to save for larger items like a phone, trip or holiday spending.

Allowances are part of acquiring the skills they need as they move towards independence, and again our role is to educate and help them with budgeting and financial skills.

The expectations on what they are to fund with their allowance should be agreed upon in Placement Planning Meetings and Reviews.

Bank Accounts

All children in care should have a bank account, again, refer to your fostering services policies and guidance on this subject on how to set this up and how it works.

Generally, the foster carer opens the account for the younger children, and once young people get to 16yrs they can open their own bank accounts, or take over control of their own accounts.

This will vary between banks and fostering services so again make sure you are aware of the policies.

With pocket money foster carers encourage and educate children to budget and save for things, the accounts for savings are separate.

Foster carers can be trustees of the bank account, but this must be approved (probably at the Placement Planning meeting), but it depends on the delegated authority and whether the birth parents are involved in the decision-making process.

Opening a bank account – what you will need

Proof of identity – This can often be challenging as there is not always a passport or birth certificate. It is the role of the Child’s Social Worker to obtain these.
Proof that a child lives at your address – This can be in the form of a letter from the local authority to confirm that this is a looked-after child in foster care at your address.
If you have difficulties the banks often have a ‘non-standard’ case referral system and the staff at the bank should be able to tell you how to contact them for help.

Savings

Child Trust Funds and Junior ISAs

Every looked-after child will have either a Child Trust Fund (CTF) or a Junior ISA account which is government supported, and into which more savings can be added.

Foster carers will pay an amount (set by your fostering provider) into this account on a monthly basis.

Foster carers will become the ‘registered contact’ for this account and manage it and when children and young people move their savings need to move with them and the registered contact moved to the new carer.

The £200 paid in by the government to the Junior ISA cannot be accessed by the child until they are 18yrs, but the registered keeper only manages the account until the child reaches 16yrs.

It is the foster carer’s duty to ensure that their child or young person has one of these savings accounts and that further funds are paid into it according to policy.

It is the duty of the local authority to identify those children and young people who when entering care do not have a CFT. The local authority should clearly set out their policies for savings for looked-after children.

Check out your local authority or agency’s policies as you may have another separate savings account that you pay into. The policies seem to vary, there seems to be no standardised procedure even if one exists.

Savings for the fostered child should never be in a foster carer’s own bank or building society account they must be in a separate savings account. Foster carers are at risk of being accused of fraud if they do this.

It’s important to know that savings in excess of £6,000 in the young person’s accounts can or may affect their ability to access benefits.

Government link on savings accounts for looked-after children https://www.gov.uk/government/publications/junior-individual-saving-accounts-for-lookedafter-children

FosterWiki recommends

From the feedback, we have had from mainstream foster carers around the UK, we make the following recommendations:
We recommend that the Local Authorities should manage the savings at source, this would alleviate:

The difficulties foster carers have in opening savings accounts, and the challenges in paperwork, home addresses and bank issues with carers opening accounts for children that are not theirs, and for UAAS children with a lack of status and ID. It is also challenging as foster carers never have parental responsibility (PR).
The complexities that arise when children move placements, savings accounts not being passed on, another change of account, social workers not being allowed to accept cash or cheques from foster carers.
The need for all savings to be tracked and checks that each carer is paying in sufficiently from the allowance.
Perhaps deduct the savings from the allowance at source, if the carers have to pay it anyway why isn’t it deducted and placed straight into an account held for the child by the local authority, who are their corporate parent?
Too many savings go astray or don’t get paid in and children and young people do not get them on leaving care.

Brighton & Hove

This council is an example of what we see as best practice in this area, it is best for the foster carer but more importantly best for the children and young people.

This is from Brighton and Hove’s savings policy:

“Previously in-house foster carers were tasked with opening saving accounts for young people in their care.

These accounts were in the name of the child and not accessible by the child, social worker or foster carer to withdraw money. Some difficulties arose with this method around the opening of these accounts with the paperwork available or the delays that they have in receiving this information, as well as finding banks that would allow this.

Opening accounts for some young people can be more difficult than others such as Unaccompanied Asylum Seeking Children due to their status and lack of valid ID. This can be made more complex when a young person moved quickly or frequently as savings can at times get forgotten.

Also supervising social workers and social workers should not accept cash/cheques from any carers and there needs to ensure all monies are clearly tracked if there are any queries e.g. via BACS.

The local authority wanted to make this process simpler and remove any potential risks of money going astray or being spent prior to the young person turning 18. Therefore a plan for the Local Authority to manage the saving ‘at source’ for each young person was developed.

It was felt that savings for children and young people placed in-house should be universal and that £5 per week (£0.83 per day) should be saved for each young person no matter what their age or how long they are placed in foster care.

Carers will not have the responsibility to make long-term savings, benefits of this are:

Carers do not need to open a long-term savings account.
Do not need to account for these or pass details on to new carers when children move.
Do not provide details of these to supervising social workers or children’s social workers.
Savings are made automatically by the payments team from the weekly allowance before the carer receives this.
All savings are recorded and can be tracked.
All young people placed with in-house carers receive the same amount each week from the point that they are placed in care.

”

Foster carers comments

”To be honest I also feel it shouldn’t be down for us to sort savings but it should be the social services. They can open savings accounts so much easier than us as I have found it to be a nightmare if you are not the legal guardian. Plus you then know every foster carer will be paying out of their allowances.”

“Savings are deducted from our payment, so that’s all good and consistent. Pocket money guidance is given but everyone seems to do their own thing and expects this to be spent differently!”

“I only foster babies for short-term at the moment. I’ve never been asked to save but remember something about our LA saying or recommending that we do.”

“I’m with an agency, we put £10 per week into an account the child can have when they are 18. Also, weekly pocket money depends on age. At supervision, we need to evidence the savings account.”

“The agency I’m with does a savings account for each child. Pocket money is arranged at the Placement meeting and depends on age etc.”

“As far as I’m aware my council do not have a set amount it is all left to the foster carer to sort it and decide.”

“The LA doesn’t even need to open accounts, they could just calculate it & invest money that’s then ready for the child at 18 plus its high street rate interest, the council would not have to pay out each week but would have money in the bank. The savings system is a complete mess & offloaded onto carers to make LA paperwork easier.”

“Pocket Money was governed by the fostering agency/LA and was dependent on age, and could not be stopped or held back. If they had a mobile phone, a portion of that was used towards it. We had to pay £10 per month into a savings account.”

“My agency gets the carer to sort their savings. I save it up and then when the children move on then the hassle begins, it is a fab idea if the agency takes this on and we just pay into it.”

“Very woolly in our LA. We give different amounts of pocket money dependent on age. Also, save monthly for them and pay monthly for their phones. Years ago we got a percentage breakdown but nothing recently. We also pay for any activities/clubs. In our LA there is an ISA set up, to replace Child Trust Fund, with £250. However, getting access to put savings in is proving impossible. No one can supply details in order to do this. Our LA has a huge turnover of all staff, so no one knows.”

“I have to save monthly. Opened savings accounts for both. Then have a current account for both which weekly pocket money goes into. They set the amount. When I have monthly supervision, my SW checks the amount & looks at each account on my phone app.”

“I can highly recommend Starling Banking & their children’s accounts. Have high filters on what they can spend money on, such as no gambling, we need to authorise online spending, and set the amount spent per day so they can’t blow the money. I saved for every child I cared for.”

“I also search for any savings accounts the children have had before. Through Shared Foundation. There should be someone in each LA that liaises with Shared Foundation to track any previous savings the kids have had or the £250 from the government. I was told to set up an ISA for a child I used to care for. When moved, I gave all the info & how to transfer the ISA over to CSW. Guess what, it’s never been transferred! That’s the SW job!”

“My LA has a breakdown of how much fosters carers should put away for saving, spends change depending on the age of a child/young person. You have a breakdown of how your allowance should be spent on a child’s clothing, clubs, household bills etc. This is a guide but it’s a helpful guide, especially for new foster carers. My issue is my LA doesn’t seem to be monitoring if foster carers are putting monthly savings away for LAC.”

“As I have had so many different CSWs during the 4 yrs my foster child has been in my care it’s been almost impossible to get a cover letter to open a bank account for her. So I have opened a separate account paying monthly what should be £25 however I put £50 a month for her. She is due to move placements next weekend so I have asked for a receipt from her social worker that I have handed over all her savings and the total amount. She has while being in my care always been a very good saver herself for things such as holiday spending money, toys/games etc.”

“At our agency, they save £40. month for the child and when leaving care it is paid into their bank account. No expectation of the foster carer. When I was with the LA the foster carer was expected to save and they have a guide on the amount depending on the age of the child or YP. At the agency I’m with now any savings child has is recorded on Charms. They also take note of the child’s bank account details and the amount saved. At the Local Authority the IRO would ask at the child in care review and when filling out the form before for care review bank account details and amount are recorded.”

“Our foster agency saves £10 a week. Pocket money range from £8 to £13 age depending. Clothing allowance £20 a week. Activity allowance £5 a week. Toiletries £5 a week. These can be used to buy or given to the child depending on various factors.”

“With our Agency the children have £40 savings into a trust fund each month, and weekly pocket money of £5 for 0-4years, £8 for 5-10years, £11 for 11-15years & £18 for 16-18years.”

“I have to give child £10 per week per child at every age. I am not allowed to withhold this money for any reason. I usually do bank transfers.”

“The previous carer is withholding savings. Have no idea why she won’t move them on. We have a ring-fenced account for savings and a current account for pocket money which our YP has a card for. With previous children, we have received a cheque from previous carers and passed on savings with a cheque.”

This is what our FosterWiki disability specialist has to say:

If you look after a child disabled they would still get the recommended amount as any child from who you foster. This money would be paid weekly by direct debit from the foster carer into the child’s bank account.

However some children depending on their learning needs may not recognise the value of money, so they would need the foster carer to help them buy things they might like always encouraged to choose to purchase and pay for themselves. They may need help understanding they only have so much money or what to choose.

Always have a contactless debit card and have online banking so you look together and can get them involved in their own banking habits for when they may be more independent to manage finances.

Disabled children like to shop online or gaming and are easy targets for financial abuse online. Also can be too trusting of others especially peers who may want them to spend their money on them.

The foster carer will usually keep the Card in a wallet /purse safe for the child for when they want to spend their money. Savings would also be part of this scrutiny and paid into their account.

Pocket money should be discussed from the point of a child coming to live with you and discuss the best way to provide the people you work for with evidence so you don’t find yourself in an allegation of financial abuse.

Pocket money or any other awarded to them belongs to the child and you are just supporting them.”

As always speak to your fostering provider, get their policies and work with your own and the child’s or young people’s social worker.

Useful Links

Take a look at the New foster carers toolkit for more useful information about fostering and your role as a foster carer.

New Foster Carers Toolkit

Information, Help and Support

Help and support created for foster carers, by foster carers, we are the experts by experience. We have the first foster carers knowledge bank.

Please find our help and support page here.

Access both the open pages and members area. Both are free to access and footprint-free. The member’s area gives you privileged confidential access to FosterWiki’s experts by experience for advice and guidance. You will also find short courses and guides from the foster carer’s perspective, top tips, allegation help, templates, and the ability to add to FosterWiki. With more content being uploaded regularly.

Please let us know what information or advice pages you would find useful and we will put them in place. https://fosterwiki.com/register/

Allowances Bank Accounts ISAs Personal allowance Pocket Money Savings

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