Laughing all the way to the bank?

First Holy Communion is the ideal time to teach your children the value of money management, writes SHEILA WAYMAN

MANY EIGHT-YEAR-OLD children get their first taste this month of what it’s like to be flush with cash, when cards containing euro notes are pressed into their little hands on First Communion day.

Once the celebrations are over, there is an ideal opportunity to introduce them to the principles of financial management. How much of it will be spent straight away and on what? What will be saved and how? And will any of it be given to others?

Children are expected to receive, on average, €337 for Communion this year – a 4 per cent increase on last year – and €389 for Confirmation, a 20 per cent decrease on 2011, according to research conducted for the EBS earlier this year.

Six out of 10 adults believe it is a good idea to give children money as a gift for their Communion or Confirmation. So how do parents handle this substantial influx of cash with their children?

When Tara Kearns’s oldest child, Evan, made his Communion in Co Cavan two years ago, a family tradition was started in dividing up the spoils. It was suggested he should share some of his money with his two sisters, buy something for himself and the remainder was to be saved.

This year, when it was his sister Elisha’s turn, she also gave her siblings some money. She received €200 in total but she was less aware of the money than Evan, says Kearns.

“She was more excited about family and friends coming to our house for the afternoon.” The following day Elisha paid for a family outing to the cinema.

“She spent some of her money in the Build-a-Bear Factory and the remaining half is now in her credit union account.”

Kearns and her husband have tried to instil the value of money in their children from a young age.

“Money is earned in this house, just as good behaviour is rewarded,” she explains. “We have a system in place where all the chores in the house have a monetary value so the more jobs the children complete, the more money they earn – never more than €3 per child per week.”

Kearns believes children today are savvier about the value of money.

“Obviously personality traits play a big role in how money is spent,” she adds. “For some the smallest amount can burn a hole in their pocket, while others can appreciate and understand that if they save it’ll accumulate.”

Communion is a great time to talk to a child about the use of money, which is one of those life skills that can’t be just left to schools to teach, says marketing consultant and mother of four, Sheena Horgan, pictured above.

“Fundamentally, one of the big issues around it is that parents are the absolute role models for children’s attitudes to money,” she points out.

“Myself and my husband like our children to have a healthy disrespect for money – by that I mean to understand what money is, and that we need it, but not to be so caught up in it.”

It is an attitude that the extended family is aware of, which is why, talking a few days before her second daughter Emma is due to make her Communion in Stillorgan, Co Dublin, Horgan expects the eight year old will receive more gifts than cash on the day.

However, afterwards will be a perfect time to open an account for Emma in the credit union or post office, she says.

“We will have a chat: ‘What do you need and what do you want? It’s meant to be a treat, so it would be nice to get something you really like.’ Spend some and save some would be my ideal.”

Horgan has supported the Children’s Sunshine Home for many years and her children are aware of that – “so if we talk about giving some of the money away, that for them is their default charity.

“It comes down, again, to my attitude towards money and what I do – they will replicate it,” she adds. “If you’re flaithulach, they will be; if you’re penny pinching, they will be.”

Grainne McDonald’s son got €830 for his Communion in Co Sligo two years ago but she doesn’t expect her daughter will get that amount this year, because she believes people are more inclined to give girls presents, such as jewellery.

“My son was obsessed with how much he would get. From the first card he opened he kept count of what he got.

“It was the talk of the class and, on the Monday after the Communion, I had told him not to tell anyone what he had received,” she says.

“When I asked him that evening, he said he had to tell as the others all told – in the playground as opposed to the classroom.”

He spent some of it on football jerseys, footballs and a Wii game. “He wanted to get an iPad [refused], then a laptop [refused], a puppy [definitely refused] and a hamster [no living animals allowed].”

Most of the money was put in his bank account. “He lost track of what he had actually spent so would not know now that there was money left over,” she adds.

Tricia Cawley, who had her third child of four making her Communion earlier this month, says she tried to keep it low-key, with the focus on the religious nature of the event.

There wasn’t much talk about money in advance as, being in a rural school in Co Mayo, there were only three other children in her daughter’s class making their Communion, she explains – and just six in total at the ceremony.

She is letting her daughter, Cúshla, buy something for herself, such as a PlayStation game or outfit – “she has to get a bit of pleasure out of it” – as well as taking the opportunity to show her how to save in the credit union.

“Then they can joke about her when she’s an adult and say ‘that woman still has her Communion money’.”

Anne (not her real name) says her son got a “shocking” €1,470 on the day of his Communion two years ago. She puts it down to his exalted position as the first-born grandchild in a very large family.

“He had expected to get some cards – I didn’t tell him he would but it was all discussed among his friends in school. I don’t think he even comprehended how much he actually received.”

She put €700 into his savings account and let him spend the rest – “making sure that at least some of it went on something he would have for a good while, like a TV and trampoline. He also bought quite a few clothes and new runners for the summer.”

The money saved went towards camps he wanted to do that summer and spending money for his holiday.

She worries about her second child making his Communion.

“There won’t be anything like the fuss his older brother got and, knowing my eldest, he won’t be able to keep from boasting about what he got on the day.

“If I’d known how much he would get,” she adds, “I would have let him open a few cards and keep that money, maybe €200, and put the rest into his account and not mention it again.”

‘At an early age you need to teach them to become masters of their money, not slaves to their money’

Teaching children financial literacy has been a passion of Sharon Lechter for more than 20 years – ever since her own son ended up getting into credit card debt after he had left home to go to college.

“I thought I had taught him about money,” says Lechter, best known as the co-author of the international best-selling book, Rich Dad, Poor Dad.

“What happens is our kids are with us when we spend our money – they witness the ‘just charge it’ mentality – but they are not necessarily with us when we make it, or when we pay our bills. So they get a skewed sense of money.”

She will be in Dublin this weekend (May 27th) to give a one-day seminar entitled Think, Act and Grow Rich, which will include a section on raising financially responsible children.

“It is so important for kids to understand that money is a tool,” says Lechter, in a phone interview from Arizona where she lives in Paradise Valley, outside Phoenix.

“At an early age you need to teach them to become masters of their money, not slaves to their money.”

Whether or not to give your child pocket money – or an “allowance”– is, she says, a parenting philosophy. But she asks parents to consider the conditions under which money is handed to children.

“Do you want to build an entitlement mentality or do you want to build an entrepreneurial mentality?”

When it comes to deciding a policy on pocket money, she says that things like brushing teeth or taking a bath or shower, even at the age of six, come under the heading of personal responsibility.

“That is not something an allowance should be paid for – but many people do. It’s crazy.”

The next level is family and social responsibility – you need to do things like wash the dishes, or help an elderly neighbour put out the rubbish, because you are a member of the family and community.

“Then there is the going above and beyond, where you want to earn that bit of money and there are additional things you can do around the house or in the neighbourhood to make money,” she says.

Above that again, is the entrepreneurial level where, if you need extra money, you can become creative about how to make it.

Take that Communion money – tell them you want them to save part of it, perhaps some of it will go to the church and some of it they can spend on themselves, she suggests.

A mother of three and grandmother of three, she also asks parents to think about how they communicate about money to their child.

“When you say ‘we can’t afford it’, it is a negative, final statement. If your child wants something and you truly can’t afford it, you say, ‘Johnny/Jane, right now that is not in our budget but how do you think we can earn the money to get that?’ By changing that from a statement to a question, you ignite the entrepreneurial spirit in your child.”

Teaching children to budget is a crucial life skill, she stresses. Start with a weekly allowance and, as they get into their teens, extend it to a month.

“Invariably they are going to run out of money before they run out of month. That is when a parent typically says ‘here’s another 20’.”

Far better, she says, to have a conversation along the lines of: “So you ran out of money and you want to go to that movie with your friends this weekend – well you don’t have the money so too bad, you are going to have to stay home, unless you can come up with a way that you can make the money.”

Forget the money for a minute and think of your child’s self-esteem, she advises.

“When we were children there weren’t credit cards so if we wanted something we had to set a goal, achieve it and then celebrate. That achieving cycle is what has gone away with our instant gratification.

“If you keep giving them money – and I sometimes show parents with ‘ATM’ tattooed across their heads – you are not helping your children. You are creating a dependency on a never-ending flow of money.”

Teenagers need to learn about money and be allowed to mistakes, she adds, “because you want them to stub their toe while they are still at home – so they don’t break their leg when they leave.”

Sharon Lechter is giving a one-day seminar, Think, Act and Grow Rich, on Sunday, May 27th, 9am-7pm, at the Ballsbridge Inn Hotel, Dublin. For more information see horizonspeakers.com. Tickets cost €97.

MONEY MANAGEMENT: PARENTS ADVISE THEIR TEENS

All-Ireland research shows there is increased awareness among parents, particularly in the Republic, about the importance of financial education for their teenagers.

Some 91 per cent of parents in the Republic feel it is “very important” for their teenagers to be able to manage money, compared with 78 per cent in the North, according to the findings of a survey conducted by Amárach last autumn for Ulster Bank.

Seven out of 10 parents in the Republic are talking more to their teenagers about money than before and three-quarters of parents say they have seen an improvement in their teens’ ability to manage money.

Ulster Bank provides a financial education programme called MoneySense for Schools, aimed at 11-19 year olds, which is used by half the secondary schools in Ireland. Parents will be able to reinforce that learning when the bank launches MoneySense at home on the internet next month.

Education on personal finance will become a core strand of the secondary school curriculum in the Republic for the first time from September 2015, with the introduction of the revamped Junior Cert.