You would be laughing all the way to the bank if you had been given the kind of pay rise this year that we apparently gave our kids: an increase 23 times the rate of inflation. Average pocket money across the country rose from £5.79 in 2003 to £7.82 in 2004 – that’s an increase of 35 per cent. I wonder if I could ask my boss for a 35 per cent pay rise. It’s not going to happen, is it? (No – Ed) I know it and you know it because we know about money.
But have you stopped to wonder whether your kids understand it? Because it has to be said that many of them don’t. Apparently, being “in the red” means someone is very angry, a “pin number” is something you sew with, and “paying tax” means the cab driver gets his fare. A survey from Britannia Building Society also tells us that wearing a hat into a bank or building society has become a new legal requirement!
Four thousand kids aged three to 16 were quizzed on their understanding of basic financial issues. The results showed that one in 10 children still don’t know what a mortgage is by the time they reach the age of 16. And more than a fifth of 16-year-olds remain confused about when and why they would need a pension. Only 75 per cent could confidently state that a pin number is a personal identification number, whilst one in five were unsure how they would use a cheque book.
While you might expect teens to have some grasp of finance, the flights of fancy produced by asking the same questions to three to seven-year-olds become almost lyrical. When asked why you should get a mortgage, |
answers included “to measure the rain”, “when I get dead” and “if you were sick”. Further, it seems that a pension would “help me become a grandma”, or mean “getting a new pet” and a current account was considered to be “fruit cake”, “a biscuit”, or “raisins” (you can see the logic, can’t you). The phrase “in the red” may mean “wearing a Man Utd shirt”, “being naughty”, “being hot” or even “winning the race”. The serious point behind all this is that it appears many kids are getting to the age where they may face significant financial decisions but just don’t have the understanding and knowledge to make the right choices.
This is where a touch of parental guidance could come in handy on money matters and about money management,starting with pocket money. The Halifax, which has been conducting research into children’s pocket money levels since 1987, says the average amount of pocket money has risen by more than double the rate of inflation since the late 1980s.
Specifically, the average amount of pocket money for seven to 11-year-olds is £6.31 per week, a 460 per cent increase from the £1.13 quoted in |
1987’s survey. The average amount of pocket money for 12 to 16-year-olds is £9.15, a 165 per cent increase from the £3.46 quoted in 1989. For the record, inflation, as measured by the retail price index, since 1987 is 81 per cent and since 1989 57 per cent. And what do kids do in return for their pocket money? Not much, it would seem. Just 15 per cent of children have to earn their pocket money by doing jobs around the home. Of that figure 27 per cent clean, 25 per cent do the washing up and 21 per cent do the vacuuming. Don’t get me wrong. I’m not suggesting that you make the little darlings slave away for every penny. Nor do I expect you to cut theamount of pocket money you hand over with a stern admonishment in a voice like Gordon Brown to exercise “prudence with a purpose”.
Incidentally, the reputation held by the Scots for miserliness would appear on the evidence of the Halifax’s pocket money analysis to be a gross calumny. Scottish children receive more pocket money than any kids south of the border, getting an average £9.23 per week. While the real pocket money losers are those in east England and the south east who get an average of £5.95 and £6.97 per week respectively, £1.87 and £0.85 below the national average.
By all means continue to spoil your kids rotten if you want to but while you are doing it, maybe you should explain to them just how money works, where you get it from and how hard you have to work to get it. Maybe they will appreciate it, and you, that bit more and just maybe they will be that little bit more prepared for the big wide world themselves when they come to fly the nest. |
