the times Saturday December 4 2021Body + Soul 11
GETTY IMAGESice cream, but if you want the sundae cost-
ing £3.50 extra you have to pay me back,’ ”
Porretta says. Create opportunities for
them to spend too, so they are not just
pointlessly accumulating money. Think of
pocket money primarily as a teaching tool,
advises the New York Times money col-
umnist Ron Lieber, the author of The
Opposite of Spoiled (Harper). “It’s
no different from the books you
buy for them, the art supplies or a
musical instrument.”Be open about
your earnings
Even if we don’t talk to children
about our finances, we can be
sure even the youngest are picking
up every signal we unintentionally
and constantly give out, says the
wealth mentor Diana Chambers, the
author of True Wealth (Altitude Press).
“Children see if their parents fight over
money, how they negotiate, who makes
the financial decisions in the household,
and if a credit card bill causes anxiety.”
Be honest about your finances, although
not brutally so, she says. “If a parent has
lost an income stream, it’s better not to dis-
guise it because that’s confusing to a child,
who is going to know things have shifted.
It’s better to find a way to communicate it
so that the stress is not passed to the child,
maybe along the lines of, ‘I’ve lost my job
and it means we won’t have as much
money as we normally have. It means
we’re going to be careful what we spend for
a while, but we’ll find things to do that
don’t cost a lot of money.’ That’s reassuringM
oney seems to be up
there with sex, dieting
and drill music in the
list of things we’d
rather not talk to our
children about. Recent
research among 3,000
parents found that fewer than half (46 per
cent) discussed it openly, no matter their
background or income.
Is it, perhaps, because we assume it’s too
vulgar to mention, or that we don’t want to
sully the innocence of childhood? Possibly
a bit of both, says Sarah Porretta, director
of the government-backed Money and
Pensions Service, which carried out the
research. “But I think a big factor is that
parents don’t know where to start. Should
I give pocket money, and if so when, how
much, how regularly? Should it be for
chores? And how do I do it now that we live
in a cashless society? It paralyses people
into doing nothing.
“When I talk to parents, it’s almost uni-
versal that they agree it’s really important
to discuss, but they are doing nothing. And
these are parents who are really thinking
about their children’s wellbeing.”Discuss money before
they turn seven
Experts agree that basic financial educa-
tion should start as soon as children can
count. Research at Cambridge University
showed that adult money habits were set
by the age of seven. “Ideally, before seven,
you give regular pocket money, and you
talk about money and the choices you’re
making,” says Porretta, who has two youngchildren. “I consciously vocalise all sorts of
decisions I’m making day to day. For ex-
ample, we were in a café in half-term and
the bill came to £20. The news about the
rise in the minimum wage to £9.50 had just
come out, so I talked to them about how if
they worked in this café they would have to
work two hours to pay our bill. Even at six
and seven, they totally got that.”
Talk to under-sevens about why you
work (“I have to pay for our house, the
heating, the wi-fi”), spending and trade-
offs. “If you’re taking a packed lunch on a
day out because you’re already spending a
lot that day, vocalise it. These scenarios are
a brilliant learning opportunity if you just
say them out loud,” Porretta says. “Having
conversations about earning, hard work
and the inter-relationship between them
are really important. Little kids can get it.”
The website moneyhelper.org.uk has
factsheets on how to teach children about
money through games and play.Make them have pocket
money, even if they
don’t seem interested
When parents provide everything a child
could conceivably need, it can make pock-
et money pointless. It’s up to us to create
what economists call an environment of
scarcity to sharpen their desire to save and
spend their own money.
That might mean telling them that you
will no longer be buying sweets or comics
at the supermarket; it’s up to them to pay
for them now. Or give them options to “su-
persize” your decisions. “When we are out
I might say, ‘I will pay for a single scoop of— we are creative, we still have options
and we’ll come through this.”
Should you tell them how much you
earn? Yes, but only when they’re 16 or 17,
Lieber says — and only if you’ve already
put it into context: how much you spend
on bills, mortgage and insurance, and how
much you save. “I think it’s important for
them to know before they leave for uni-
versity or work,” Lieber says. “They need
to know what income you require to pro-
vide the kind of life they’ve enjoyed so far.”Give young children cash
Between the ages of four and six, children
need to receive pocket money in coins;
studies show it doesn’t matter how much
you give (the most common amount for six
to nine-year-olds is £5 a week) — only that
it’s regular and that you can’t start too
young. “At that age it’s about the tactile ex-
perience of seeing money in a savings jar
grow in front of your very eyes,” Lieber
says. “There’s real power in that.”
He recommends having three transpar-
ent jars: one for spending, one for saving
and one for charity, maybe in a 60:30:10
split. But how do they spend it, now that
pretty much all transactions are online or
at least cashless? Porretta gives her child-
ren a £1 coin every week, but they don’t
carry it with them. “When we’re in a shop
we talk about prices and options, they pick
something and I pay for it with my card,
then they pay me back in cash. That way
they are still transacting with cash, but the
external transactions are digital, which is a
better reflection of reality.”
Once you’ve laid these foundations, you
could move to a pre-paid debit card such as
GoHenry, RoosterMoney or Osper when
they reach six. Research by GoHenry
among 400,000 6 to 18-year-olds last year
showed that only 9 per cent spent money
in cash; a popular age to get a card is eight.
Most cards charge a monthly fee of about
£2-£3, although HyperJar is free. Parents
load the cards with cash and there are op-
tions to control how much and where
children spend, start a savings pot and link
money to chores.Let them make mistakes
“I know parents who give pocket money
but the children have to talk through with
them how they’re going to spend it,” says
Louise Hill, a co-founder of GoHenry.
“For me, it’s important that they have the
chance to make mistakes. When my
daughter was 13 she and a friend went
to Superdrug and she came home
with 26 nail varnishes from the
bargain bin — they were 50p
each and she had just over £13 on
her card, so she’d spent every
penny. The next day a friend in-
vited her to the cinema, and I
said, ‘Oh dear, that’s a shame.
Pocket money day is next Fri-
day.’ Twenty minutes later she
offered to clean my car to earn £10.
It was a great lesson.”
To a teenager, having power over
spending gives them agency, a sense of
self-efficacy and practice in decision-mak-
ing — all things experts say modern teen-
agers lack. Lieber suggests that, when they
are 14, you work out the clothes your teen-
ager will need for the year ahead, the total
amount you would spend, and then give
the money to them. “Hand it over in one
lump sum with the instruction that they
have to buy everything on the list. If they
want to go to the charity shop and buy a
cheap coat and spend more on something
else, fine. But the rule is they have to buy
everything, and if they run out they’ll need
to do extra chores to earn more.”
But what if they buy a really cheap coat
that won’t keep them warm? He’s uncom-
promising. “Rectifying an error is a valu-
able lesson.”Why you should talk to
your child about money
New research shows that parents are reluctant to discuss financial matters.
But it’s vital that they do, say experts. Rachel Carlyle finds out why
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