You'll be amazed at young children's grasp of money matters!
As the father of two young children, it's partly my job to teach them about money. Despite my being a financial writer, this isn't an easy task, largely because my kids wrongly assume that my wallet contains an endless supply of cash.
Mum’s bag or Dad’s pocket?
While my family set-up (married couple, two children) is fairly typical, incomes and upbringings vary widely across the UK. Therefore, what children think about money also shows strong regional variations.
To demonstrate these different attitudes to money, the Halifax has released its latest Halifax Pocket Money Survey, based on interviews of over 1,200 children aged between eight and 15 years.
Question 1: Where does money come from?
|
Answer |
UK average |
Lowest |
Highest |
|
Work |
55% |
40% (London) |
61% (East Midlands, North West, Wales) |
|
Bank/BS |
30% |
22% (South West) |
38% (London) |
|
Mummy's bag or purse |
29% |
22% (South West) |
34% (London) |
|
Daddy's pocket |
26% |
16% (South West) |
33% (London) |
|
Government |
18% |
9% (Wales) |
29% (Scotland) |
|
Cash machine (ATM) |
14% |
10% (West Midlands) |
22% (North East) |
|
Family and friends |
12% |
6% (South West) |
18% (West Midlands) |
|
Tooth fairy |
3% |
1% (North West) |
9% (Wales) |
|
Trees |
2% |
1% (Yorkshire/Humberside) |
4% (South West) |
|
Other/Don't know |
6% |
4% (Scotland) |
11% (Wales) |
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As you can see, the survey found that more than half of British children (55%) know that to get money, you earn it by working. However, almost one in three kids (30%) thinks money comes from the bank, while 29% believe it comes from Mum's bag and more than a quarter (26%) say it comes out of Dad's pocket!
Interestingly, there are big differences in what children believe about money across the UK, notably between the South West and London. Only 40% of London children believe that money comes from work, versus 61% of kids in the East Midlands, North West and Wales.
A surprisingly high 29% of Scottish children think that money comes from the government, perhaps reflecting lower employment levels and higher state spending north of the border. Cash machines are popular in the North East (22%, versus the UK average of 14%), while family and friends seem to be more generous in the West Midlands (18%) than in the South West (6%).
Money make-believe
Only 3% of children believe money generally comes from the tooth fairy, rising to 9% in Wales.
Even so, I'm a big fan of this unseen dental assistant. By giving children money (£1 per tooth chez D'Arcy), she turns what could be a frightening experience -- losing body parts -- into a profitable adventure.
Lastly, only 2% of children think that 'money grows on trees'. Having been repeatedly told the exact opposite by my grandparents during my early years in the North East, I'm unsurprised that this figure is so low. Children don't believe fairy-tales forever...
Question 2: How do you think your parents get money?
|
Answer |
UK average |
Lowest |
Highest |
|
They go to work and earn it |
89% |
78% (North East) |
96% (East Anglia) |
|
They borrow it from banks |
7% |
1% (East Midlands) |
12% (London) |
|
They just have it in their pocket, purse or wallet |
7% |
1% (East Anglia) |
13% (London) |
|
They ask friends and family for it |
3% |
5% (London, South East) |
1% (East Anglia, East Midlands, North West) |
|
Don't know |
4% |
1% (South West) |
1% (North East) |
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As you can see, nearly nine in ten children (89%) think their parents get money from working, but this falls to 78% in the North East. Almost one in eight young Londoners (12%) believes that their parents' money comes from borrowing from banks, versus the UK average of 7%.
Only 1% of East Anglian children think that money somehow just appears from pockets, purses and wallets, but 13% of London children believe this. Lastly, only 3% of children believe money comes from family and friends -- which may well be true in struggling households.
What lessons should children learn?
As they get older, it's vital to teach children the vital life lessons about money. For instance, they need to learn that, in order to spend, they first have to work and save.
Here are seven simple facts I'd teach to children:
- You can only spend it once. (So decide what to spend it on carefully!)
- Anyone can spend, but smart people save. (Thanks to interest, saving allows your money to make more money -- even while you sleep.)
- Don't spend more than you earn. (Otherwise, you'll get into debt and banks will control your life.)
- Buying things on credit always costs you more in the long run. (Often, it's better to save up before buying.)
- You can make money over the long term by owning small parts of successful businesses. (You do this by buying shares in companies.)
- Another way to become wealthy is to start and run your own business. (This is hard work, but the rewards can be great.)
- You need an income to replace your wage when you stop work. (This usually comes from a pot you've saved called a pension. Without a pension, you'll be poor when you're old and grey.)
Finally, I am developing a guide to personal finance for local primary schools. What financial wisdom would you teach these under-12s? Please tell me in the comments box below!
More: Start saving for a rainy day | Six solutions for suffering savers | Why working is a mug's game