Want to raise financially confident kids? It’s never too early to start
Do you know how confident the children in your family feel about managing money?
New research from HSBC UK has delved into children’s attitudes towards finances. More than 1100 children aged between six and 15 were surveyed in May, to find out more about their savings goals and understanding of different aspects of managing money.
The research found that only one in six (15%) kids have never had a savings goal. Nearly half (49%) had saved for a new toy, making this the most popular savings target, followed by 43% who had saved for games. One in seven (14%) had saved up money to spend on holiday.
A generous 26% had piled up their pennies to buy gifts for family members or friends, and 5% had donated to charities, while 6% had saved up for a pet, and 10% had put aside money for an iPad or tablet.
Looking at how often they receive money, 34% get pocket money every week, while 24% receive it on a monthly basis. Some 2% receive pocket money every day.
When they do receive money, children were most likely to get between £5 and £7.99, although around one in six (16%) receive £20 or more.
While the majority receive their pocket money in cash, around a third (34%) receive a bank transfer, the research found. Some 60% of the children surveyed said they had a bank account.
Just over a quarter (26%) of children said they never get any pocket money.
The research also found that many may have a steep learning curve ahead of them, when it comes to how they might manage their day-to-day finances as an adult.
Two-thirds (65%) claimed they don’t understand digital and mobile banking well. More than two-thirds (68%) felt they did not understand debt well and, worryingly, 67% were not confident in their knowledge of fraud.
Just over half (52%) of children were not confident about budgeting, and 65% were unsure about how to manage a bank account. Encouragingly, more than half (57%) did feel they understood the value of money and savings well.
The findings coincide with HSBC UK helping to develop a money skills activity badge, to help Beaver and Cub Scouts aged six to 10 to build important financial literacy skills.
The activities help children ‘learn by doing’. For example, Cub Scouts may budget for a camp meal and learn about Fair Trade items or locally sourced food. Or they may choose items to pack in their bag for a hike, helping them to learn the difference between what they want and what they need.
In the past, children may have often come into physical contact with money, helping them to understand the value of banknotes and coins. But in an increasingly digital world, where contactless and mobile banking is surging in popularity, money has become more ‘invisible’.
Stuart Haire, head of wealth and personal banking at HSBC UK, says creating new and interesting ways for young people to engage with financial literacy is key.
“Financial literacy is a critical life skill. Having a bank account from an early age helps children to be more aware of money, especially in today’s society, where cash is less visible to children due to the rise in digital payment methods and online banking,” says Haire.
“Whilst learning how to use online banking is important, it’s crucial that we support children’s understanding of the value of money, and actions such as seeing and receiving physical money can help them. Often money is just a set of figures on a screen or in a maths paper for many young people today. It needs to mean more than this.”
Want to help your child become more financially confident? Here are five tips from HSBC UK…
1. Have money conversations. For example, when doing the weekly food shop, take a list and decide a budget – you can then explain what you can and can’t purchase and the impact of going over budget.
2. Show them cash and coins. Talk about different forms of money and their value. When out shopping you can help your child find the right amount to pay for an item. HSBC UK’s financial education hub (hsbc.co.uk/financial-education/first-steps) provides resources for games involving cash.
3. Explain the difference between needs and wants. This can help them develop good saving habits and raise awareness about debt.
4. Plan for the future. If your child receives pocket money then it’s a good idea to help them set savings goals.
5. Talk about security. Explain how we can protect our personal details, including not sharing passwords or Pins. HSBC UK’s fraud hub (business.hsbc.uk/en-gb/fraud-hub) has information about scams.