Financial responsibility begins in the home with early budget management
Pocket money, saving and explaining the value of work are still central to teaching financial literacy to children
“You’d want to be very clear. If you’re giving pocket money that is earned by doing household chores or tasks, you should add the caveat that part of being in a family is the expectation that everyone helps out. You don’t get paid to be in a family,” she says, adding that while children may not get paid for everyday chores, you might offer them the opportunity to take on additional chores to earn additional money.
Children typically respond better when something is more tangible, which can be more difficult in this digital era.
With the days of banking books now long gone however, one way of recreating that level of engagement with your child is by using saving stamps from the Post Office.
You can pick up a “Cyril Squirrel” savings card in your local post office, and stamps can be bought for just €1 each.
So, every pocket money day could involve a trip to the post office to allow children to save a certain portion of their allowance.
Another option would be for parents to buy the stamps in bulk and allocate them each week, thereby saving on the weekly trips.
The only downside to the cards is that, to cash them in, they must first be lodged to an existing post office account.
Credit unions often also run saving stamp schemes. St Colmcille’s in Kells, Co. Meath for example, runs its “Sammy Stamp” programme, which allows children to buy stamps for as little as 50 cent, which they keep in their saving book.
As an alternative, or for smaller children, a money box or piggy bank can fulfil the same goal.
Fortune recommends that children save 10 per cent of their pocket money, so even if they get just €2 a week, 20 cent should be saved.
“It all matters; it’s all relative to their age and stage of life,” says Fortune, adding that, if there’s a busy week coming up where children might need more money than usual, they should be encouraged to save extra in the preceding weeks .
Establishing saving habits early will also help when children encounter the windfall that has become religious celebrations such as first Holy Communion and Confirmation, where a typical child will come into about €400.
Easier said than done perhaps in the current climate, but getting a job is a way for children to learn how the world of money works; particularly if they get taxed.
“I think getting a job is great idea,” says Fortune, adding that if children get a job they may no longer pocket money, so adds the following caveat:“I’d be very careful about how much disposable income they have – some teenagers have quite a bit.”