A third of children worry about money
One in three children in the UK admit that they worry about money, according to a new survey.
While 89% of parents have money worries, they fail to hide their anxiety from their children with almost three-quarters of children saying they are aware of their parents' concerns, the annual Halifax pocket money survey has revealed.
The poll of 1,200 children aged between eight and 15 and more than 500 adults found that one way of dealing with financial worries was to borrow money. Almost a third (29%) of parents confessed to borrowing money from someone they knew, while 16% of children have also done so.
What is more, a quarter of children say they have lent money to someone they know, with 30% saying they've even helped their parents out financially - a 2% increase on last year's survey.
Little financial understanding
Now that personal finance lessons are taught in secondary schools - which the 11 to 15 year olds in the survey would have had - it was disappointing to see that the new curriculum has had little impact on a child's understanding of day-to-day finances.
Asked if they had to explain what a loan was, only 56% of children could do so, while only 36% could explain what a credit card was – both down 1% from last year. There was no change in the number of children who could explain what debt (54%) or tax was (26%).
On a more positive note, 90% of children understand that their parents earn money through work, and almost two-thirds would like to know more about current accounts and savings.
And children seem to have picked up the savings habit, with 70% saving some of their pocket money and 10% saving all of it. The traditional moneybox is where 45% of children keep their pocket money, while 42% use a bank account.
Emphasising the important role that parents play in teaching their kids about money, the survey found that 60% of children would prefer to learn about money from their parents, while 20% believed school was the best place for financial education.
Giles Martin, head of Halifax Savings, said: "Parents need to be very aware just how much of an impact their own feelings about money can have on their children's views and habits. While finance is now being taught in schools, children don't want their mum and dad to take a back seat.
"Talking about money at home can be a great way for children to start building an understanding of the importance of good money management. Pocket money can be a great tool for parents to teach their children the basic life skills of earning, and saving money."
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.