The future looks bright for these young savers
The recession has finally taught our children the importance of saving, writes John Cradden
Published 06/08/2010 | 14:04
It may have taken some time to sink in, but it seems the recession is beginning to teach our current generation of youngsters the value of money.
A recent survey on children's saving habits by the EBS revealed that 63pc of those polled believe that children will save most of the money that they receive for their first communion, up from 42pc last year.
"The 50pc increase in the number of children likely to save most of their communion money is significant," says Dara Deering, director of membership business at EBS.
"We are seeing families adapting to the recession in various ways such as encouraging their children to learn how to save some money."
Dermott Jewell, chief executive of the Consumers' Association of Ireland, which has run and participated in a number of consumer education programmes for schools, says that overall understanding by young people of family finances has risen significantly.
"As parents have changed their shopping habits, many young children that are accompanying parents to Aldi, Lidl etc will have learnt a new awareness about price, value and quality over simple brand appeal," he says.
"Few will have missed discussions at home and with aunts, uncles and grandparents regarding bills, debts and the importance of saving, cutting back and not wasting anything."
In addition, few extended families will have escaped the harsh realities of unemployment among at least one of their members," said Mr Jewell.
"These are experiences that most books cannot replicate and I do believe that we are therefore raising a more financially aware, if not astute, younger generation."
On the other hand, the EBS survey suggests that the adults now appear to be taking a more optimistic view than they did last year.
Almost three in four of the respondents questioned said that the current economic climate would impact negatively on their children's futures, compared to four in every five last year.
In addition, there was a five pc drop to 57pc in the numbers of those who said that they felt that they would not be able to afford important things for their children.
But still, 69pc of parents now encourage their children to save or start saving for their future due to the economic climate.
According to Mr Deering, the renewed focus on family savings prompted EBS to relaunch its dedicated children's savings account two years ago. Since then, over 6,400 such accounts have been opened.
Besides the EBS, credit unions are keen to underline their commitment to encouraging the savings habit at a young age.
Brian Douglas, Manager of Greystones Credit Union, says the habit of savings should be taught to children from an early age and often a good way to do this is to work it in as an exercise with their "pocket money" or the money they "earn" for doing household chores.
"If a child is given €5 or €10 a week then they should be encouraged to save €2 or possibly €4 of this," he says.
"This is merely a nominal amount with the real purpose of the exercise being to get children into the mindset of saving."
Children make up an estimated 12pc of the total membership of credit unions, says Mr Douglas.
"Very often these accounts were set up by their parents or grandparents when they were born and in later years children continue the savings habit by using the account to keep safe their communion and confirmation money."
Some credit unions also run 'branches' in schools throughout the country with a designated time and day each week for students to make transactions throughout the year, says Mr Douglas.
As has been the case for some time, there is certainly no shortage of advice and materials to help promote the teaching of personal finance matters to school children.
The National Consumer Agency website, www.financialcapability.ie, plays host to many of the available resources for financial education in schools.
An Post runs a long-established savings stamp scheme called Cyril, where children in participating schools can purchase stamps from the school teacher who co-ordinates the scheme.
The children can subsequently use the stamps to lodge into a Post Office Savings Bank deposit account.
But the burning question for many is: what constitutes a reasonable amount of pocket money these days?
There are no survey figures for Ireland but in the UK, the most recent figures for average pocket money amounts were the equivalent of about €5.50 per week for 8-11 year olds and about €8.50 per week for 12-15 year olds.
A look at some Irish online discussion forums shows how expectations vary widely -- anything from nothing to €25 a week, depending on the age of a child.
But many parents say they also use the dispensing of pocket money as an opportunity to attach a few conditions, particularly to unruly or lazy teenagers, and saving a portion of their money each week.