Date:
Saturday September 05, 2015
Page:
7
Region: Europe
Edition: 01
Why it’s time
to kill off the
tooth fairy
SERIOUS MONEY
Claer
Barrett
T
he tooth fairy:
wanted for crimes
against financial
education. Her
typical MO — providing an anonymous pillowbased cash distribution system
to your children. Her crime?
Distorting what is likely to be
their first cash “transaction”
into a belief that money is generated magically — with the
added irony that it will be
spent on tooth-destroying
sweeties.
Am I a heartless wretch for
not believing in fairies?
(There, I’ve just killed
another). But before you pronounce judgment, allow me to
pitch my alternative belief system — the truth fairy — and
why parents need to get real
when they talk to their children about money.
The start of the new school
term marks a full year since
personal finance education
officially became part of the
national curriculum in England. Children in secondary
schools are now theoretically
receiving instruction in the
benefits of saving and budgeting, and the dangers of debt
and disorganised finances.
I say “theoretically” as this
essentially boils down to a few
hours in maths and citizenship
lessons, and does not apply to
free schools or academies who
can follow their own curriculum. There is also no exam to
test this knowledge — they just
have the real life “test” of managing student debt and the
housing crisis lurking round
the corner.
Furthermore, a “school
report” carried out by Nationwide found that only a quarter
of children said they had lessons about financial education
during the past year. Worse, 39
per cent of teachers said they
thought the move would not
make any difference to the
way children view money.
Nobody can dispute that
teaching children how to manage their finances is a “good
thing”, but some would argue
this is the job of parents rather
than teachers. But not all parents are good with money —
which is why we must beef up
personal finance education in
schools to ensure nobody falls
through the cracks.
If you’re a parent reading the
FT, there’s a good chance that
you are pretty astute at running your household budget.
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So why upset your children by
killing off Tinkerbell?
“My parents were from the
generation that didn’t talk
about money” was a common
response I received from
(older) FT colleagues when I
asked what their parents had
taught them about money.
The connection between
work generating wages, and
there only being a finite
amount of cash to go round
was made more powerfully in
households where money was
tighter, forcing parents to say
“no, we can’t afford it”.
But too often, we shield our
children from financial matters. Their first pocket money
likely comes from the tooth
fairy; we might tell them their
Christmas presents come from
Santa (OK, that’s another can
of worms, but bear with me).
The “in app” purchases many
make on mobile devices follows this trend of fantasy
money (a friend was horrified
recently when his ten-year-old
ran up a £5,000 credit card bill
doing just that).
We hide bank statements
and household bills. We shoo
them away if they try to look at
a restaurant bill. We would
rather explain the facts of life
than say how much we earn.
Just as children progress
through levels of maths at
Date:
Saturday September 05, 2015
Page:
7
Region: Europe
Edition: 01
school, we should steer them
through “real-life economics”
at home. And not just by making them earn their pocket
money (as I, and many of my
FT colleagues had to) by doing
household chores.
Some people — notably
Columbia Threadneedle fund
manager Toby Nangle — take
this to extremes. He has
blogged about creating a
household bank, offering his
children 10 per cent interest
per week on their pocket
money deposits (which are
kept low, at 10p per year of age
starting from age 5, so a fiveyear-old would get 50p a
week). This is a fun way
of teaching them the joys of
compound interest, but the
“catch” is that any money that
goes into the high interest
account cannot be spent on
sweet stuff.
“It can only be accessed to
purchase assets approved by
the fiscal authority (me),” he
explains, adding that the
“marshmallow test” of
delayed gratification has been
passed, as amounts of £5 or
more are regularly saved.
The system might sound too
complicated for some, but he
argues “it facilitates good conversations about money”.
The next step? Teaching
them that compound interest
can also work against
them, in the case of a credit
card or loan. And maybe
helping them save for bigger
cussing financial matters with
you — is a crucial step as they
become young adults.
I have always tried to expose
my stepchildren to “real life
maths”. I’ve let them analyse
restaurant bills (challenging
them to split it five ways, or
add a 10 per cent tip in their
heads). Out shopping, I’ve
encouraged them to find a better value deal rather than buy
the first thing they see.
And when I judged they
were at an appropriate age, I
showed them our entire
household income and outgoings — salaries, mortgage, bills,
savings, the lot. The shock
value of a parent doing this
should not be underestimated
— they were fascinated. And
when the eldest two went to
university, we drew up a
similar budget which I’m
proud to report they have (so
far) stuck to.
I can’t guarantee that my
system will prevent children
from making mistakes but the
lessons of the “truth fairy” will
leave them better equipped for
their future than a lollipop and
a pat on the head.
Claer Barrett is the editor of FT
Money. [email protected];
Twitter: @Claerb
items by offering to “match
fund” their own efforts.
Whether it is taught in class
or at the kitchen table, getting
children to ask about money —
and to feel comfortable dis-
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Date:
Saturday September 05, 2015
Page:
7
Region: Europe
Edition: 01
Dreamland: tooth fairy economics — Daniel Atkin/Alamy
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Please don't cut articles from FT.com and redistribute by email or post to the web.
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