Posted by Allison on 5 April 2009, 10:52
Kids have a very limited exposure to money and what it means in its broadest terms, but that is not to say they don't know anything about it at all. Probably our earliest encounters with money come via the Tooth Fairy – we know that if we leave a tooth that has fallen out under our pillow, it will magically be replaced by a coin of some sort by the following morning. The only difference is that the adults of today remember being paid far less than the children of today get. Ten or twenty pence was about right in the late Seventies and early Eighties in Britain, whereas inflation has now driven that up to about a pound.
This is where we can see that the factors that influence currency as a whole also influence our children. Even at a young age they begin to learn that certain things are worth more than others and therefore demand a higher payment; for example a single tooth might warrant a pound, but a double from the back might receive double that amount in payment. It's even been known for a tooth which has caused real problems to be rewarded with a five pound note once it has fallen out!
Inflation has also had a real bearing on pocket money in every country in the world. A recent report generated in India revealed that the amount of pocket money given to children had gone up an incredible (and possibly inflation busting?) six times in the last decade. Meanwhile Australian children have seen their pocket money grow to twice the amount they got a decade ago.
The whole issue of pocket money is intriguing to many people when it comes to understanding more about how different currencies work. Just as with the money earned by every adult, the pocket money given to children worldwide will have a different purchasing power depending on what country they live in and how their economy is doing.
Although the amounts given to individual kids does vary, in general pocket money is seen as a good way to teach children about how money works, what it can buy and how much it is really worth. Of course it is too young an age to start thinking about exchange rates – since these will rarely affect kids anyway – but starting to understand more about money at a young age will give kids a good grounding in life and lead to a more responsible attitude about money when they finally go out and start earning their own.
To this end many parents now ask their children to perform certain tasks in order to receive their pocket money. For example teenagers may be asked to keep their rooms tidy and will have their pocket money (or allowance as it is sometimes referred to in America) withheld if they don't comply with this rule.
There has also been some concern, particularly in the UK, that older children who are given a lot of pocket money each week are spending more of it on alcoholic drinks and running into problems as a result. This doesn't seem to be indicative of the culture in every country though.
Things have changed in the arena of pocket money for kids though. This is mostly due to the world at large changing and information becoming more readily available via the internet. This isn't to say that kids are starting to trade currencies on the stock exchange; rather they are learning more about how their parents work to earn more money and they are arguably learning how to earn more of it themselves.
But while some kids are getting more pocket money than ever before (even when you take into account the effects of inflation) other children aren't getting any at all. However contrary to what you might think, this doesn't seem to result in children learning any less about how currency works or what it is worth.
A lot of people believe that giving children an amount of money every week or month gives them a chance to understand what money is all about. Even at a young age they can start to become familiar with the different coins and banknotes that make up the currency of the country they live in, and get to know what each one is worth.
Of course if you go back a few years, the adults of today who were kids in 1971 got a real shock to the system when their pocket money came in pounds, shillings and pence one day, and plain old pounds and pence the next. If adults found this huge changeover confusing, what did the kids think?
Some parents whose children were only five or six at the time decided not to teach their children too much about the old system for fear they would get confused once the new decimal system came in. This probably worked out for the best since they were able to take on board pounds and pence quite easily – more so than the adults!
One thing is certain though – only children of a certain age will have realised that their pocket money didn't go quite as far after so called D Day as it did before; many shops decided to round up prices slightly rather than drop them and lose money, and of course they never went back down again.
Many people remember having special lessons at school which explained how the new currency would work and what each old coin was worth in the new system. In this sense it is very likely that a lot of children were better prepared than the adults were when D Day finally arrived.
Looking at currency through the eyes of a child is something that we all go through, but it is especially fascinating to take a step backwards and see how children of different ages and times reacted to money. And it continues to be a fascinating journey now as the world continues to change and our currencies change with it. Who for example would have guessed that the majority of children in Europe would end up getting the same currency for their pocket money, regardless of which country they lived in?
Perhaps in the future all the world's children will be popping coins of the same currency into their piggy banks – or perhaps more likely, they will all end up being given a plastic card at a certain young age, on which their pocket money will be digitally transferred once a week. It's an intriguing thought.
One thing that many people agree on though is that children should be taught more about money, currency and how it all works than they are at present. This does of course vary in different countries but a good grounding in the world of currency leads to a better understanding of money in adult life. It is much easier finding out all the ins and outs of currency when you are sitting in a classroom than trying to struggle with it all on your own when the time comes to get a job, start saving and start working out whether investing in the stock market is really a good idea or not.