Teaching children how to handle money can give them a valuable life skill, writes SHEILA WAYMAN
CONSIDERING THE financial mess the current adult generation has created, how to handle money would seem to be a particularly valuable life skill for children to learn.
“If you can teach your child the difference between needs and wants, how to budget and how to save, your child will know more than many adults,” comments the business websites forbes.com.
You might not want to taint the innocence of childhood with an over-emphasis on finance but it doesn’t take long for a child to realise the power of money.
Children start to ask questions about it from as young as four or five years old and greatly influence what their family buys, according to research in Northern Ireland last year. At that age they don’t know where money comes from or understand the value of it but it certainly interests them, concluded a survey commissioned by Northern Bank for the launch of its education website, Moneyville.co.uk, last September.
Moneyville is a virtual town where children are introduced to basic money management skills through a range of online games. The website was certainly popular for a while with the youngest boy in this house after he was shown it at school. Now he and his older brother are more interested in having and spending money for real.
Pocket money is one of those many parenting issues where what I aspire to do is never matched by what I actually do.
In theory I give my 10 year old and seven year old a modest set amount each week, of which they spend a little and save a little. In practice, I often forget to give it to them – and anyway they are bought too many things for which they should be paying or saving.
Veering from meanness to over-indulgence, as I tend to do, is certainly not the way to go. There is a delicate balance between teaching children that they can’t have everything they want and making them feel they are so much worse off than all their friends.
Children and money is a topic that is often raised on parenting courses. Should you give pocket money in a structured way or simply pay for treats when appropriate? If you do opt for pocket money, then what age should you start giving it? What is the going rate? What conditions should be attached?
From an informal survey of about 20 parents around the State for this article, it seems that those who give pocket money start at about the age of six or seven. The going rate averages about €5 a week for the under 12s and anything between €10 and €20 for the over 12s, depending on what they are expected to spend it on. But many parents admit they buy additional treats.
For some children, pocket money is earned by doing jobs around the house. Other parents do not link it to chores, pointing out that everybody in the household is expected to help out.
The way parents handle pocket money reflects their financial habits and the importance they place on money, according to Rita O’Reilly, the manager of the confidential support service, Parentline. It is up to each household to devise a way that works for them.
“The thing to remember is if you choose not to give it, or give it, that is the parents’ choice and you should not feel pressurised by the child or the Joneses.”
Personally, she doesn’t give pocket money to her two children. For one reason, she thought it would be too difficult to maintain a rigid system.
“I always think that if you give your child, say, a tenner a week and they go and spend it on Saturday on whatever and come Tuesday evening some of the other kids are going to the pictures, you are not going to say to your child ‘well actually, you don’t have your money, you spent it on Saturday’, because if you do that you are leaving them out. These unexpected things come up. If there is something I think they should go to, I give it to them.”
She also feels strongly that her children should not be paid for routine chores in the house, such as making their beds or filling up the dishwasher.
“I think if you live in this house, you do it. Fair enough if it is over and above these. You might say ‘I’ll give you a fiver if you Hoover the car’. I’m worn out saying that. I’ve neither given the fiver nor got the car Hoovered!”
However, she acknowledges that other parents are quite disciplined in saying if their children do a set of chores during the week, they get payment, and that works.
She adds: “I suspect the parent who is disciplined about giving pocket money to their 10 year old is very disciplined about money; knows what’s going out on every bill, and they want to instil that in their child. That is probably the atmosphere in the house and that is fine if that’s the way you do things.”
On parenting courses run by Help Me To Parent, the benefits of giving children pocket money are outlined as follows:
It introduces them to the concept of managing their money;
It allows them to make choices about what they want to spend their money on;
It gives them a degree of responsibility for budgeting their own money;
It allows you to agree a plan of what they need to do to “earn” their pocket money.
If pocket money has to be earned, the golden rule – as with all parenting situations – is that you must follow through.
“No matter how difficult it is for you to not give the pocket money if the agreed tasks are not completed, you must stick to the agreement,” says Martina Newe, co-founder of Help Me To Parent. “You can give an occasional extension on the time by which they have to complete the task but you should not give the pocket money until the tasks are completed.
“Remember, you are teaching your child basic skills in managing money and earning rewards. These skills will be of great benefit to your child throughout their life.”
Beverley Dinsmore, who lives in Julianstown, Co Meath, decided to introduce pocket money for her two daughters, Meaghan (10) and nine-year-old Katie, after attending a Help Me To Parent course.
“They recommended using sanctions to stop unwanted behaviour [the girls were fighting a lot] and one of the suggestions was to use consequences for negative behaviour, ie stop pocket money,” she explains.
She and her husband Noel had never got round to giving pocket money and thought that it was time they did. So, after much discussion, they worked out a system.
The girls receive €7 a week, for which they have to do general household chores such as keeping their room tidy. This amount is written down in a pocket money book and they are deducted (or fined) if they do anything against the rules (this would include fighting or being naughty – the fines are five cent each and don’t usually amount to much). They are then given the pocket money due at the end of each week.
“We thought that the fine of five cent would be meaningless; however it had a huge impact, reducing unacceptable behaviour,” says Dinsmore, who works from home as an administrator with the London-based Royal Academy of Dance.
The girls are allowed to buy what they choose and are amazingly sensible, she explains. They spent their first pocket money on purses to keep it in.
“They are asked to contribute towards large items that we may be buying them as additional treats. For example, Meaghan wanted a new Meath Gaelic jersey and contributed significantly towards this. They are also saving some with the local school/credit union scheme taking from €2-€5 into school to save every other week.
“They now have a greater understanding of the cost of things and appear to value the things that they buy themselves. Their attitude to saving is great – better than their parents!”
Dinsmore says she does not buy them as many treats now. “They appreciate buying them themselves and will even negotiate with each other; buying sweets and sharing – something that was never heard of before.”
The key is having a book to write everything down, she stresses, so she knows exactly what is due at the end of the week and the girls can see how often they have caused deductions to be made.
“Please don’t get the impression that I am super organised or our girls are perfect,” adds Dinsmore. “They just now appreciate getting money that they can spend!”
swayman@irishtimes.com