Do your children know the value of money?
Dragons' Den star Sarah Willingham explains why earning pocket money is an excellent starting point for kids to learn vital money management skills
Published 23/02/2016 | 08:42
Does your child get regular pocket money - or do you bung them some cash as and when needed?
And do they need to do anything to earn it - such as tidy their bedroom or do the washing up?
Dragons' Den star Sarah Willingham is a firm believer that pocket money should be "earned, not expected".
The consumer champion and businesswoman, who has four children, has worked with a credit checking company (Experian) to develop a free app called Jangle, to help children aged between seven and 11 to develop money skills.
Experian's research has found that 85pc of parents who hand out pocket money say their children do not always have to do anything in return for it.
More than half (59pc) of parents who give their children pocket money do so every week, forking out €10-€15 on average, Experian's survey of more than 1,500 parents found.
But one-in-10 just hand out pocket money when their child asks for it - handing over as much as €50 typically per time.
Previous research suggests that children tend to form their money habits from a very young age.
And as we know from watching Dragons' Den, entrepreneurial hopefuls who don't have a grip on their finances swiftly run into trouble during pitches.
Willingham feels strongly about setting youngsters up with vital money know-how to help them throughout their lives.
She says she will "never forget" the value of the money she earned on a paper round as a youngster.
Willingham says: "If you're given a pound and then you go and spend that pound, it's very different to if you've spent half an hour sweeping leaves."
She adds: "I do think that pocket money is actually a perfect place to start because pocket money is often the first time that children have any relationship with money really themselves, they have something in their pocket.
"By encouraging kids at a young age to earn that money, not just handing it out, and to save for things is a great place to start because often that conversation is child-led."
The research also found that while parents tended to see themselves as the biggest influence on their children's attitudes and behaviours towards money, they also ranked celebrities as having a bigger influence than teachers.
Willingham was "really lucky" that her mother took a big interest in financial education.
She says: "I left school with a good relationship with money. I knew what credit was and what that actually meant. I knew what a student loan meant, I knew that if I took this house, I was going to have to pay gas and electricity and water and poll tax, as I think it was at the time, and all that kind of stuff."
So how else can parents start money conversations with their children?
Willingham will often chat to her children about prices and weighing up the best deals when going round the supermarket.
She also says her children played at setting up a "restaurant" in their home and they discussed all the costs that went into serving food.
Willingham says: "It was a great learning process, because if you sell a cappuccino for £1, who's making it, who's putting the electricity on, who's renting that property, etc v, and ultimately, you're actually making 16pc or something off that cappuccino, but it's important to understand everything that goes into it.
"So I do think the more we can think outside the box like that as parents - it's game playing. And it's great to do it from a really young age.
"If the kids want to make cupcakes, you can sit with them and work out how much does it actually cost.
"'I'm going to sell these cupcakes for 20p each and that's great, I'll make three quid'. 'Well, how much does it cost to make the cupcakes in the first place?'
"And you work out it actually costs £4.50. 'Well then, that's not very good, is it?'
"It's that kind of understanding. It's so much fun as you see their brains think about stuff like that, it's really cool."