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Financial literacy is all about being good with money. Every day we make decisions about money, whether it's shopping for food and clothes, paying household bills or simply deciding when to pay by cash or credit card. The choices are endless. As the world of personal finance becomes increasingly complex, it's important that people have the skills to make wise decisions about spending, personal debt, choosing financial products, planning for the future and avoiding financial scams.
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The case for improving the way that we handle money is clear. People who don’t learn to manage money are more likely to make risky financial choices. When it comes to kids the challenge is even greater. Research conducted by the Finance First partnership found that:
- More than half of all primary school aged children receive some form of pocket money, but less than 40% of children who receive pocket money earned it
- Less than 25% of children who receive pocket money regularly save their entire allowance, and
- At least one in four children influence major household purchases such as the choice of holiday destination. More common areas of influence are everyday purchases, with 82% of primary school aged children influencing the purchase of toys and games, 80% influencing the choice of family entertainment and 73% influencing the purchase of household grocery items.
The "Kids and Money" study conducted amongst parents of children aged between five and 12 years in 2005, shows that all children spend some of their money on games, toys and lollies, but girls are more likely than boys to spend on books, magazines and clothing.
Key Findings:
Pocket Money
• 50.2 % of children aged 5 and 12 years receive pocket money
» 21% of children who receive pocket money save all of their allowance
» 57% of children who receive pocket money save some of their allowance
» 22% of children who receive pocket money spend all of their allowance
• 49.8% of children aged 5 and 12 years do not receive pocket money.
Spending habits - how do children spend their money?
| Purchases |
All children |
Spenders |
Savers |
| Toys / games |
65% |
64% |
65% |
| Lollies / Confectionary |
49% |
65% |
43% |
| Books / magazines |
48% |
50% |
48% |
| CDs/Videos/DVDs |
35% |
22% |
40% |
| Fast Food |
25% |
39% |
19% |
| Mobile Phones |
8% |
9% |
7% |
Household purchases influenced by children
| Toys/Games |
82% of children are influencers |
| Family entertainment |
80% of children are influencers |
| Clothes |
77% of children are influencers |
| Groceries |
73% of children are influencers |
| Holiday destination |
24% of children are influencers |
| Mobile Phone |
11% of children are influencers |
| Motor vehicle |
7% of children are influencers |
Major influences on children's understanding of money
| Category |
Total |
5-8 yrs |
9-12 yrs |
| Parents |
97% |
97% |
97% |
| Teachers |
47% |
51% |
42% |
| Grandparents |
44% |
47% |
41% |
| Friends (peers) |
39% |
41% |
37% |
| TV |
39% |
41% |
38% |
| Internet |
8% |
5% |
11% |
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