The price of everything, the value of nothing

Mark Stammers's picture

Last week I had ‘the conversation’ my 11-year-old son.

No, no that one, the one about money.

‘Dad, look on this website, they’ve got that voice-activated R2D2. It’s only a hundred and thirty quid.’

‘A hundred and thirty quid! Have you any idea how much money that is? Your Mum and I work hard all day to pay for everything and blah blah blah’ and so on for about half-an-hour, long after he’d got bored and wandered off.

The boy had hit one of my parental buttons. That strange form of deja-vu you get when you realise you have become your parents. My Dad had given me the same lecture many times, and no doubt so had his Dad and his Dad all the way back to some caveman lecturing his son on the value of rocks.

After that event the subject of the value of money has been turning over in my mind ever since. Of course kids don’t appreciate the value of anything. For the most part they live outside the world of personal finance, they simply ask and if they are lucky they will receive. Pocket money is seen as a right these days rather than payment for a tidy bedroom – no such thing in our house – or a car washed.

But do adults really understand the value of money any better? In the long-gone days before credit cards, bank transfers and loans people got their wages in cash. They saved in cash and spent in cash and keeping track of their finances was as simple as counting their change. If they needed to make a big purchase they saved up until they could afford it. Their financial limitations were clear to them, and so they were patient and ‘made do’.

In the world of here and now, if I want something I can’t afford there are many options open to me that cut out all that tedious saving up business. Instant gratification. And then onto the next item on my wish-list.

I am happy to confess to being a gadget lover, iPods, iPhones, PSP’s and computers. If it looks cool and has lots of interesting buttons to press then here’s my pin number, thank you very much. Do I need them? No, not really. Most of you are probably the same, but maybe about shoes or cars or music. It’s just so easy to be tempted in these days of instant credit.

I don't mean to suggest instant access to credit is always a bad thing, but used irresponsibly it leads to debt. Very scary big bad debt, like the massive £222 billion currently hanging over the UK. This whopping figure kinda suggests that none of us are very good at gauging the value of money. Of course we can blame the banks and credit companies for lending it irresponsibly, but it’s hard to avoid our own guilt.

So by all means tell your kids about the value of money, but set them a good example too. Luckily personal finance education is coming to a classroom near them very soon, as step one in the Brown government’s plans to teach future generations the value of prudence. But what about the adults? Much of the cost of our huge debts will be born by our kids on top of their own unless we soon learn to break the cycle. Maybe it’s time we learn some new lessons about responsible spending.

Well, you could do a lot worse than check out the advice in the spending section of this very website. Not so subtle plug over.

Your Comments

I think its important to strike a happy balance on discussions about finances with your children. I am just expecting our first child and I and my other half have had some interesting discussions on the topic of how to discuss money with them (obviously when they can understand!)

I come from a family where lack of money was openly discussed, but as the eldest I found it a real burden knowing that we were frankly quite poor. I felt guilty asking for money to even go on school trips, and I dont mean skiing and exchange schemes. I mean the 100 kids on a bus to the museum type thing, and other essentials (deodarant and female products as a teenager)
My parents very nearly lost everything in the recession of the early 90s and never really recovered from it financially.

Whereas my other half is the baby of the family and never heard his parents once discuss money. He said he often felt left out of the important issues of the family, and still does on occasion.

So who's parents had the right approach? I feel neither really. So we are going to try and impart a bit of a mix. I wouldnt ever want to tell my kids that we couldnt afford basics, there are ways of getting around those sorts of questions without burdening a child with the guilt of feeling like a weight around your neck, but equally I dont want them to be spoilt and think money grows on trees.

A difficult path to walk for certain.