Wednesday 29 January 2020

Your child's Communion windfall can be a lesson in saving

With various family members bearing cash in envelopes, there's no better time to teach kids the benefits of being a good saver, writes Charlie Weston

Children can receive a significant amount of money for their Communion.
Children can receive a significant amount of money for their Communion.
Frank Conway, founder of

THOUSANDS of children who make their Holy Communion and Confirmations in May are set to find large sums of money thrust into their hands. It is not unusual for Communion kids to end up with €500 each.

For most, it will be the first time they have large sums of money.

Frank Conway, founder of, the financial literacy initiative for students and adults, says the arrival of wads of cash presents a huge opportunity for parents.

"This is a great time to use the Communion season to teach kids about money, how money works and that money is a finite resource which must be managed, stretched and protected to ensure it goes further and buys more of the things kids want."

He says the Communion and Confirmation season is a good time to encourage the good habit of saving.

Mr Conway says there is a real necessity for the children of today to become good savers.

This is because their life expectancy is much greater than it is for their parents, and especially their grandparents. This is still the case when you factor in health issues such as diabetes and child obesity.

At the opposite end of the scale, as we live longer, there is growing acceptance that the State may not have the financial resources in place to grow State pensions significantly.

So, a major responsibility for financial well-being has shifted squarely to kids on a scale we have never seen before, he warned.

"Sorry to have such bad news for kids but this is fact," he said.

Mr Conway argues that parents can be creative in helping their kids develop a good relationship with money from an early age, in a fun way that will benefit their children's long-term financial well-being. Parents must focus on the fact that money is finite and difficult to accumulate, he argues. The best advice is to get children to save with a specific goal in mind, and for parents to reward them for staying the course with their savings.

Best offers

Banks reserve some of their best rates for junior savers (see panel).

AIB and others offer competitive deals for child savers even when the monthly savings amounts are low. For example, AIB promotes a 2.25pc deal where the minimum monthly saving is €1.

A lot of the children's accounts provide "instant access" which is valuable from a marketing perspective but what would be even better is if the banks offered higher rates on kids accounts where they put the money aside for longer, and kept it there - but this is not the case presently, Mr Conway says.

What is of interest is that some banks do offer slightly higher deposit rates where the minimum monthly savings amounts are higher, which is why such products are not ideal for children. Nationwide UK, EBS and KBC all promote a 3pc deal on regular savings accounts where the mini­mum savings per month is €100 and higher.

Money is a finite resource

We still have to earn it and this method of accumulation has not changed in millennia.

As children receive Communion cash in envelopes from parents, aunts and uncles, grandparents and other extended family, parents should use the opportunity to teach kids about how money works.

Doing so will be far more valuable and offer a lifetime benefit to kids than the cash they receive on the big day.

Irish Independent

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