Thursday 23 November 2017

How to help your children spend (and save) their Communion cash

One-in-four children make more than €1,000 on Communion Day - and most want to splurge it on smartphones and iPads, writes Louise McBride

Best children's savings accounts for 1,000 Euro lump sum
Best children's savings accounts for 1,000 Euro lump sum
Louise McBride

Louise McBride

Many parents of children making their First Holy Communion this month will find themselves under pressure to allow their child to use any money raised on the day to buy a smartphone, iPad, helicopter drone or hoverboard. These are some of the items that are high on the wish list of children making their Communion this year, according to research by the parenting website mummypages.ie.

"Children are no longer looking to spend their Communion money on new bikes or football gear - it's all around technology," said Laura Erskine, mum-in-residence with mummypages.ie. "This brings a whole host of new concerns for parents who have held off buying technology for their children so far. The recent Holy Communion celebrations have caused a spike in questions to our site as to whether mums should allow their children to purchase a smartphone with their Communion money. Most of the mums who use mummypages.ie agree that the most suitable age for a child to own a mobile phone is 12."

Technology dilemma

About one-in-four children makes more than €1,000 on their Communion day, while the average child pockets almost €400, according to the latest research by mummypages.ie. This means that most children can afford to buy a tablet or smartphone with their Communion money - and this, combined with competition in the school yard, can see parents under enormous pressure to give into a child's demands for such items.

Child psychologist David Coleman believes that seven- and eight-year-olds should not be allowed smart phones or iPads. "Children of that age do not need technology," said Coleman. "You can keep your child technology-free until the age of 11 or 12." Coleman believes that it is healthier for children to occupy their time with activities such as reading, playing, baking, the outdoors, and gardening.

Children should be given the freedom to manage their Communion money as they wish - but without breaking the rules of the home, according to Coleman. "If a child wants to spend their Communion money on a smartphone or iPad, let them buy it - but don't let them use it in the home," said Coleman. "Tell them the iPad or phone can only be used when they're visiting their granny or their aunt, for example."

In this increasingly digital age, some believe that a certain amount of exposure to technology can help a child become digitally literate. A phone can also be a useful way to keep in contact with your child when they're away from home. Remember, though, if you're a parent in your 40s or older, it's very unlikely you had a mobile phone as a young child. So should you be tempted to allow your child a mobile phone for safety reasons, consider if it really is necessary to do so.

"For most children, a smartphone is used mainly for social interaction and they can become obsessive about talking or text messaging friends at all hours of the day and night," said Erskine. "Giving a child access to a smartphone increases their chance of being a victim of bullying through social media. Parental control, guidance and house-rules must be established if you allow your child a phone or tablet. "

Too much screen time - which includes time spent in front of a TV as well as a phone or iPad - can damage your child's health. Studies have shown that children on screens for more than two hours a day eat more sugary foods and exercise less than their counterparts.

Use Communion to teach money skills

For many seven- and eight-year-olds, Communion is the first time they have come into a cash bonanza - and it's important for parents to offer guidance on how that money should be managed. A good rule of thumb is to advise your child to save about a third of their Communion money, spend some of it, and then to either share some of it with their siblings - or to give a portion to charity.

If you haven't done so already, bring your child to your local bank, credit union or post office and get them to open their own savings account. Guide them towards an account which pays better interest than most. This will give you the opportunity to explain the notion of interest to your child - a simple way to do so is to say that a bank will pay your child money (that is, interest) if they save with them. AIB's Junior Saver and EBS's Children's Savings Account pay the best interest on a lump sum of €1,000.

Pocket money

You don't have to wait until your child makes their Communion before teaching them about money. Pocket money is a good way to teach the basics of managing money from a young age. "€2 a week is enough pocket money for a seven- or eight-year-old - but they must have the freedom to spend it as they like," said Coleman.

Letting your children see how much of their pocket money is used up by the purchase of a particular item is a good way for them to visualise the value of money. For example, explain how much a litre of milk costs - and show your child how much he will have left out of his pocket money after buying it. Or tell your child how many weeks they would need to save their weekly pocket money for to have enough to buy the latest toy on their wish list.

Don't give into requests to give a child an advance on their pocket money - or to lend them money. "Let your child spend cash and only spend within their means," said Coleman. "That will give them a realisation of the value of money. In later life, your child will realise that there is access to credit. However, a child that has built up a habit of only spending the money they have is likely to continue to be careful with money when they grow up."

The value of money

One of the most important lessons you can teach your child is that money is a "precious resource which should be used carefully", according to Frank Conway, founder of the financial literacy website, MoneyWhizz.org. Conway believes that children start to form lifelong money habits at the age of seven.

A that age, a child should be able to understand a number of basic money concepts, including that money must be earned - and that people who work are paid money, according to Conway. To help them grasp this concept, explain how much money is earned by the workers that your children typically sees everyday - such as a teacher, garda or bus driver.

Outlining how long it normally takes an ordinary worker to earn the money your child made on Communion day can be good way to illustrate the value of money.

Set a good example

Should your child be always in a rush to spend their money, spend to impress others, and be highly influenced by advertisers, these are warning signs that they will be bad with money when they grow up, according to Conway.

As a parent, remember the importance of practising what you preach with money. "If a child sees their parent buying whatever they fancy and putting everything onto the credit card, the child will grow up thinking they can buy what they want - and pay for it later," said Coleman. "However, if a child sees their parent budgeting well and being really careful about how they spend their money, the child is likely to do the same. Children learn almost everything about money from their parents."

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