Scheme addresses central issues in an academic way

HOW much do your children know about money? How important is it that they understand the value of money? Or the idea that it must be earned?

Even the youngest of children have some concept of money - whether it involves the squirreling away of shiny coins [into a pocket and then declaring that they are rich, or the pestering of monies from a parent for the purchase of a toy or sweet in a shop. They understand that this coin and note represents something other than just base metal or paper. The older they get, the more sophisticated becomes their understanding: the weekly allowance, for example may need to be earned; the First Communion money is definitely a major windfall.

Irish children's understanding of money has certainly been encouraged in recent years by the creation of a number of study programmes for schools, the most recent being Norwich

Union's excellent Financial Lifeskills Programme for transition year students, which provides a perfect follow-up to the Money Go Round programme designed by the Irish Banks Federation for younger children. Virtually every primary school in the country, including Irish language schools have by now received Money-Go-Round, which includes a video, worksheets for the children, posters, teaching aids for instructors and props like play coins and notes.

The Norwich Union programme takes a more serious and academic look at four central issues - Budgeting and Saving, Borrowing and Credit, Insuring Your Assets and Protecting Your Future. The 15 year-olds and 16 years-olds are encouraged to calculate their own weekly budget, consider the impact of inflation on prices, understand the impact of tax on spending power. The different types of credit are discussed, and, in the context of borrowing, even the main features of the Consumer Credit Act 1996 are examined. How to raise a mortgage is examined and the children are encouraged to work out how much the hire purchase of a £210 football kit will cost over 13 payment periods.

The Norwich has also, naturally enough, given considerable space to the issues surrounding insurance and investments. The transition year students who complete this programme, and manage to digest it all, should have no excuse in 10 or 5 years in appreciating the differences between term and endowment assurance the risks associated with investments (including gilts and unit funds) and the impact of long-term savings on retirement benefits.

No doubt many will be far better informed than their parents - which, after all, is the whole point of the exercise: to ensure that the next generation is better disposed to understand personal finance than the previous one.

Programmes like Financial Lifeskills and Money-Go-Round may have formalised the teaching of financial issues, but many children have been participants in the financial market for years and most of the institutions have tailor-made children's savings accounts and participate in school visits and in school bank programmes.

The popular School Bank involves both a banking and educational aspect; the children are trained to run the bank themselves after a series of interviews, (complete with application letter and CV) by real bank officials who then appoint the manager, assistant manager and cashiers. Their school-mates are encouraged to save regularly, usually with a piece of school equipment, a trip or project as the goal.

The institutions' commitment to children's banks and accounts is considerable. An Post, one of the biggest holders of children's money in this state, also has a wide ranging children's service which includes school visits, school Post Offices and the participation of 1,000 primary schools in its National Young Savers scheme which each year awards deserving individuals and schools with prizes. (The winning school receives a computer).

Last year it estimated that £4.5 million was lodged in the accounts of children, much of it via Cyril Squirrel, An Post's mascot for children which allows them to buy 50p savings stamps which are then pasted onto Cyril's tree card. Once £10 is saved, an account is opened in the child's name.

An Post does not have a monopoly on children's accounts however. The main banks all have inducements for small children to save with them - from Ulster Bank's popular Henry Hippo and his savings club (which produces an annual magazine), to more straightforward savings accounts like the Bank of Ireland's Rainbow account for under 13s and to the more sophisticated Excel account for teens. This account provides an ATM card, but with a fixed daily limit, set in agreement with a parent. Building societies and the credit union also acknowledge children as important clients whose powers of saving usually far exceed their ability to spend, at least in the tender years.

The banks admit that many of these children's accounts often end up forgotten or dormant until third level, when the college student, who now needs a cheque book account, finds an old pass book at the back of a drawer. The bank which so assiduously cultivated that customer as a six-year-old is now back in business. (Dormant accounts are becoming fewer however, now that ATM cards are issued to the over 13s.)

We often find if you can get a loyal child customer, even if the account goes dormant for a number of years, you will usually find it reactivated around college. or when the graduate takes up his first job," says the spokesman for Ulster Bank, the acknowledged leader in the marketing of young children's accounts.

His confidence is well founded: research done for the associated banks by MRBI has shown that 81 per cent of 15 to 19 year-olds have a savings account; recent AIB research on the student market shows that 80 per cent of students are loyal to their first bank.