It all tots up
Many parents have learned the hard way about the perils of being careless with money. Now they can show their children how to avoid making the same mistakes, writes John Cradden
NOT so long ago, it was common to hear complaints from parents that it was hard to teach children the value of money.
The economic prosperity of the past 10 years had clearly filtered down to our children to such an extent that we were possibly spoiling them.
Birthdays and Christmas left many of our little ones pretty well off, not to mention First Holy Communion, with its strong tradition of cash gifts.
Now, it seems the recession is providing many parents with a perfect excuse to engage their children more meaningfully about personal finance and teach them the importance of saving money.
A recent survey by EBS reveals that six out of 10 parents agree that the recession will be good for children, as it will "help them have a better understanding of the important things in life".
A similar proportion of parents (56pc) agreed that the recession and economic climate will ensure that children are more careful with their money.
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 Irish Banking Federation has an information pack called 'Money-Go-Round', which is provided free to each primary school in the country.
The Financial Regulator was recently involved in a joint initiative with the Money Advice & Budgeting Service (Mabs) to produce 'Get Smart With Your Money', a transition year resource pack that aims to get students to brush up on their money management skills.
But while many schools run their own programmes to teach their pupils on money matters, there is no joined-up or systematic approach to the teaching of the subject at national level.
This may be addressed soon with the forthcoming report of the National Steering Group for Financial Education, also co-ordinated by the Financial Regulator, which will set out recommendations for a new national policy on financial education.
The Consumers' Association of Ireland (CAI) also works closely with a number of schools to promote the teaching of personal finance and provides materials, but it also seeks to highlight the common ground between awareness of money matters and consumer rights.
"When they understand the value of what they have, it promotes a personal interest in what are their rights if there is something wrong with it," says CEO Dermott Jewell.
"They will then want to know how to complain and to whom."
The CAI is involved with an EU project called Dolceta, which creates EU-wide classroom materials on consumer education and financial management.
It recently sent a submission that included lesson plans for primary school pupils on the subjects which it also hopes provide to any school that wants it. One of the lesson plans focuses on getting pupils to understand how much it costs to run the home, including paying the mortgage, food, and holidays.
It looks at pocket money and focuses on what pupils can do at home to earn credits for luxury or non-essential items such as sweets, extra clothes, cinema tickets, sports clubs and mobile phones. It also proposes teaching pupils how they can reduce their "cost of living" at home, such as turning off lights when leaving rooms, cutting down on junk foods and even searching for bargains while doing the weekly shop.
"Kids can learn to ask parents questions like, how much would you charge me to rent my room?" says Mr Jewell. "How much would you charge me for electricity? Can I do chores to pay off some of the cost? How long will I have to save and how many jobs will I have to do to get my new bicycle?"
"All of this moves up and on through their growth to things like cinema, make-up, activities with friends," he says.
"Opening a savings account brings immediate interaction with post offices, banks, credit unions and costs, charges and interest in meaningful ways," says Mr Jewell. "So, too, does the cost of using and owning a mobile phone."
Besides offering a savings account product for kids, 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.
The scheme, which costs €1m a year to administrate, attracted some controversy last year following a critical report from the Comptroller and Auditor General (C&AG), which said it costed too much to run. However, successive finance ministers have ignored repeated calls to scrap the scheme, saying it was important to get children into the habit of saving.
Children make up an estimated 12pc of the total membership of credit unions affiliated to the Credit Union Development Association, according to CEO Kevin Johnston.
"Encouraging children to save is one of the core tenets of the credit union movement," says Mr Johnston.
"Some credit unions actually run 'branches' in schools with a designated time and day each week for transactions throughout the year."