‘Give me a child at seven and I will show you a saver’
– Seven year olds to lead new savings culture –
- Turning Seven report from The Children’s Mutual reveals that the recession will have a positive impact on the savings habits of today’s seven year olds
- From 1 September 2009, children turning seven will receive a second Government payment of £250 into their Child Trust Fund (CTF)
The current recession is developing a younger generation with a more responsible attitude towards money – the likes of which has not been seen since the end of the Second World War, according to the ‘Turning Seven’ report, released today by the leading Child Trust Fund provider, The Children’s Mutual.
‘Turning Seven’, which delves into the financial attitudes of seven year olds and their parents, found that two thirds of parents polled insisted that their seven year old children were better informed about finances than they were at the same age and 47% revealed their seven year olds have already saved up money for something specific such as a computer game. The report highlights that the current generation of seven year olds, will be much more pragmatic about money.
Two thirds of parents feel that their seven year olds now understand, that figuratively speaking, money ‘does not grow on trees’ and are optimistic that the economic hardship being experienced is a positive for their children. A third think it will make their child more astute and responsible with money. Indeed, 83% of UK parents now make their children ‘earn’ their pocket money.
The ‘Turning Seven’ report has been released today to coincide with the oldest members of the Child Trust Fund Generation turning seven, and as a result receiving an additional £250 top up payment from the Government into their CTFs.
The ‘Turning Seven’ report has found that:
- An important bi-product of the recession is the increasing level of informal financial education that children receive in their everyday lives
- 59% of parents have started to say ‘no’ to their child more frequently with regards to spending
- Parents are using pocket money to teach kids the value of money
Financial stresses and strains
Parents of today’s seven year olds have revealed they have a much more open relationship with their children than they did with their own parents. As a result, they are more likely to have shared the financial stresses and strains they have been experiencing due to the recession with their children. Many children today are aware of the current economic situation and to some extent understand the phrase ‘credit crunch’ and its impact on their parents.
David White, Chief Executive of The Children’s Mutual, said; “We are all acutely aware that the recession has put many people in difficult financial situations – but what is surprising is that there has been a positive impact through prompting reflection and encouraging a change in attitude and behaviour. We know that many families are feeling the squeeze, but encouragingly our report demonstrates that parents and children are creating a ‘positive austerity’ and are using the downturn as an opportunity to educate their children about the value of money which ultimately could alter savings habits in the UK from the ground up.”
In addition to this, children are becoming ‘little entrepreneurs’ doing what they can around the house to earn extra money. Some children even save money they’ve been given to spend on school trips and fetes to give back to their parents or put into their piggy banks. Almost a third (30%) of parents felt their children understood that money needed to be earned.
David White, continues; “From today, seven year olds will be receiving an additional top-up payment into their Child Trust Funds. This is a significant contribution from the Government and we felt it was important to recognise the role these seven year olds will have with their Child Trust Funds, in the future.
“We believe the Child Trust Fund also has a pivotal role to play in ensuring that good savings habits are rewarded in the future. It is today’s seven year olds that will become the vanguard of a generation when their CTFs mature in 2020. A fully funded CTF could be worth as much as £37,000 enabling today’s seven year olds to enter adulthood with a firm financial footing.”
William Higham, author of the ‘Turning Seven’ report and founder of trends consultancy Next Big Thing commented; “The report has uncovered three key socio economic drivers that will influence today’s seven year olds; the growth and subsequent decline in parental spending, the increase in formal and informal financial learning and finally the rise in stress levels and the growth of a ‘climate of fear’ around money being experienced by parents and children alike.
“These three elements have altered the perception of money and spending for today’s younger children significantly and all the signs are that this will have a positive effect going forward.”
For more information please visit our research centre This future projected value is based on investing £100 a month [plus the Government’s initial £250 CTF voucher and another £250 at age 7] for 18 years in a stakeholder CTF account. We’re assuming an investment return of 7% a year, and charges of 1.5% of the CTF account value each year. The projected values aren’t guaranteed because the value of shares goes up and down. So the final payout could be more or less than this.