Financial Responsibility For Children: Leading By (Practical) Example

As the world becomes increasingly digitised and cashless, with games like Pokémon Go grabbing the attention of children, there's a real danger young people are losing perspective. They may know the value of 500 Pokécoins, but do they know what else they could buy with the amount those coins cost to buy?

In a world dominated by downloads, in-app purchases and Pokécoins, is it any wonder parents believe that kids today have less understanding of the value of money?

As the world becomes increasingly digitised and cashless, with games like Pokémon Go grabbing the attention of children, there's a real danger young people are losing perspective. They may know the value of 500 Pokécoins, but do they know what else they could buy with the amount those coins cost to buy?

No, according to parents they don't. We recently surveyed 6,000 parents and 70% said they believe children have less understanding of the value of money than they did when they were a child. Two thirds of parents think digital money makes it harder for children to learn.

This makes sense. When I was a child, I knew I'd spent all my money when my pocket no longer rattled and my piggy bank was empty. Life was certainly simpler then. No need to worry about being locked out of my internet banking, or running out of credit of my mobile phone - our local phone box was red, took 10p pieces and your money was gone when the pips sounded!

There's something to be said for having children handle cash from a young age. We've all seen the delight on a young child's face when you give them a shiny new coin. For fun, try swapping a grubby 50p piece for two shiny 10p pieces - they'll keep the two 10ps every time! Seriously though, handling cash certainly helps children form an understanding of its value and this is an approach encouraged by PFEG - a charity that empowers young people to harness their personal and business skills.

But we can't stop progress. There are tremendous benefits of an increasingly cashless society - from efficiency and safety to audit and accountability. The black economy is thought to cost the exchequer some £2bn a year! Whether it is Pokécoins or Bitcoin, digital currencies are here to stay and a cashless future looks increasingly certain.

So, what to do about it? Today's young people are tomorrow's adults; our future engineers, scientists, teachers, and leaders. If we want young people to avoid the pitfalls of a 2008-style financial crisis and to succeed in a globalised digital economy they have to be better equipped to face the challenges of a world dominated by technological evolution and digital disruption.

At the core is ensuring the next generation are financially confident and financially competent. Enhancing the financial capabilities of young people leads to their long-term economic empowerment and acts as a catalyst for their future success.

Financial literacy is now part of the National Curriculum, but as parents, should we leave everything to school? We teach our children good manners, values, to eat well and be healthy. Shouldn't their future financial health be our concern as well? It doesn't have to mean sitting down with a text book in the evening. It's about good habits and responsible behavior - teaching early on the value of money, and how to spend and save responsibly through practical examples.

As a child, I had great delight in counting up the loose change each year, invariably collected in a large whisky bottle - it was the ice cream fund for trips to the beach. The more I tipped in my coppers throughout the year, the more ice creams I had come the summer holidays! It's a simple example, but in truth it was an early introduction to the benefits of saving.

Our survey found the key reason why parents give pocket money is to teach the value of money and encourage responsible spending and saving habits. Trouble is, kids see pocket money as a treat - in our house our daughters would blow the whole lot every weekend on Moshi Stickers and Gel Pens!

However, we then began giving them more control. My wife and I would be out shopping for a new top or dress with my daughter, but once she'd seen two she liked, she always wanted both, without thinking about the cost. So we started giving her an allowance before we left home and said "you decide". Admittedly, a few early mistakes, but the best way to learn is by doing. The result? Now she's much more careful about buying the first thing she sets eyes on and always shops around for bargains. She feels more responsible, more grown up - financially empowered we might say and the hope is that these good habits and responsible decisions will set her up well for the long-term. Our daughters now carry their own cards with their allowance loaded by us each week.

So, understanding it's hard for young people to learn the value of money in a digital world and appreciating financial confidence is an important life skill, Pokécoins might just be a great starting place for a discussion around the kitchen table next meal time.

The key here then is to get these good habits and behaviours - saving or responsible spending and budgeting - started early. Who knows, maybe, given time, the children will do a better job of managing the household budget than us - now there's a challenge for another day!

Close