When I was young, 10p would burn a hole in my pocket and my mother would berate me about my eagerness to spend. If I ever had money for my birthday or Christmas, I knew what it would be spent on IMMEDIATELY.
“Keep it a while,” my mum would tell me. “There may be something else that you would prefer. And put a little aside for a rainy day.”
Few children have no idea what a rainy day is, financially-speaking, though, do they?
According to a survey conducted by the bank Halifax last year, a child’s average pocket money is £5.89 a week – a drop from 2009 when the average was £6.24. Some are given it as reward for doing chores; others are not.
Many people say that giving children pocket money helps them with the essential life skill of budgeting and gives them some independence. I wonder how many actually save some of their pocket money into a bank account?
I learned to “save a little/spend a little” over time. (I’m not saying I’ve never been in debt or that I’m not now, but it’s a philosophy I have passed onto my children. Or, I tried.)
So when my telephone contract came up for renewal, my daughter pounced on me: “Can I have your old phone?” “Pleeeeeeaaase.”
I had a think about this. Of course, she could have the phone. But that would be too easy, wouldn’t it? Would she appreciate the fact that I had given her my old phone? Probably in the short term, but that’s all.
I looked up my old phone model on one of those websites that buys second-hand phones and saw it was worth £22.50. Not much, maybe, but that’s a fair few weeks’ pocket money off her nan.
A compromise was to be made: she could have the phone, but only if she saved £22 and paid for it. That stopped her in her tracks for a while. I could see the mathematical cogs whirring around in her mind, working out how long it would take to save for it.
The next question came: “Could I have the phone now and give you some money every week for it?” My answer: no way (another lesson in buying things “on the knock” was now under way. This girl needs to be more financially savvy).
Debt may not be bad, but attitudes towards debt can be. While she is likely to be in debt up to her eyeballs if she goes to university or takes a mortgage in later life, it’s the kinds of debt that she and her fellow classmates need to be educated about.
The new PSHE curriculum now teaches financial education, but it’s not the golden bullet; it won’t answer all the questions or provide the solutions. But it may help to change attitudes a little and help them understand the psychology of retail/business.
So, a few weeks after the first conversation about saving for the phone, my daughter came up to me, as pleased as punch. She had saved the £22 and handed it over. I gave her the phone.
Even she agreed it had been worth doing. She said it had focused her mind as to how much things were worth and what you had to do if you wanted something, but couldn’t quite afford it.
I’d love to say it made her more patient, rather than wanting things NOW, but that would be taking it just a little too far … she’s already talking about the next phone she wants!
How do you teach your children to be responsible with money?