Do children have unreasonable expectations when it comes to money?
Some new research suggests the personal finance knowledge and salary expectations of youngsters today needs some work.
The study by Halifax found children want to earn £4 million a year, but think they will ‘only’ earn £1.5 million a year.
This equates to around 50 times the average UK salary and suggests the children they asked for the survey might need to moderate their earning expectations for the future.
Speaking to a group of 8-15 year olds, Halifax found that girls have slightly more modest expectations than boys.
They found that girls expect to earn £1.1 million a year, compared to £2 million a year for the boys. Moving to knowledge of personal finance matters and the cost of living, the survey also uncovered some worrying findings.
The children believed that a loaf of bread costs £15 and a pint of milk costs £17.
They also vastly overestimated the cost of a house; perhaps not unreasonable at this time of surging property prices. The children thought a house cost £485,000 compared to an actual average cost of £220,000.
One area where cost expectations fell short was for school uniforms, where children claimed a cost of £180 compared to an actual average spend of £213.
The survey also asked children about their retirement expectations, finding they wanted to retire at age 56. This compares with a current state pension age for the children surveyed of 68 years old.
Giles Martin, Head of Savings at Halifax, said:
“Children who want to be a footballer or a doctor when they grow up may be in for a shock, but at least a loaf of bread is much cheaper than they thought. We know that children look to their parents to learn about money and its value, and fortunately there are many simple things that parents can do to help build this knowledge.”
There are plenty of ways for parents to teach their children about money and improve their understanding of personal finance matters, including the real cost of living.
Halifax suggests encouraging a savings habit from a young age.
In our experience, adults become spenders or savers, so developing a savings ethic at a young age is a positive step.
As our society becomes increasingly cashless, we might not use piggy banks as much anymore to teach savings, but we can still open a savings account for our children and get them into the habit of depositing their pocket money on a regular basis.
Talking about pocket money, Halifax suggest that this is used as a reward for doing chores. Pocket money is a great way to link doing work to monetary value, which might help temper those unreasonable salary expectations for the future.
Talking to your children about money matters is really important. Whilst money is often seen as a taboo subject within families, by communicating with our kids and sharing some of the details of household finances, we better equip them for managing their own money in the future.
You might not want to disclose every aspect of your personal finances - your salary, for example, is likely to be something you choose to keep private - but there is no harm in sharing the household budget for food shopping, for example.
When you take your children to the supermarket, use it as an opportunity to talk about the cost of things and get them plan some meals within a set budget.
Personal finance education in schools remains a fairly hit or miss affair, so it’s down to parents to give their children the knowledge they need to be confident with their money as they get older.
What steps are you taking to teach your children about money?