There is an assumption that the habit of saving money, or visa versa, spending them forms in childhood. Although some people believe that it is usually influenced by parents and their behavior as an example, others are convinced that financial literacy is learned by children on their own, with time and experience. However, it can also change throughout life, depending on a person’s routine, needs, preferences, hobbies, addictions, or weaknesses. Even though sometimes spending goes out of control and it is not easy to manage it, it is still possible to take some steps in developing the habit of keeping the money. The main thing is to be confident and have some patience and enthusiasm. Moreover, nowadays, there are so many ways and possibilities to become skillful and aware of the financial field. Furthermore, it is no less essential to teach children how to do it themselves and how to be economical. Still, it is necessary to take into account children’s age and sex, as much as a family’s wealth. Usually, people appreciate the money they earned themselves more than those that someone gave them for nothing. That is why, as people grow older, they change their minds and priorities and understand the real value of hard work and the remuneration received for it. Although usually spending habits of children and parents are very different, they all need to be well aware of financial literacy to properly and carefully plan their future purchases.
As a rule, the older people get, the more different things they need and, accordingly, the more money they spend. According to the Office for National Statistics (ONS), 15-year-olds spend more than triple the amount 7-year-olds do (Hastings). These are £12.40 to £7.40 per week which they spend on very different things: starting from everyday needs like clothes, shoes, food, or cosmetics, and ending with the entertainments like toys, games, or parties. Often, what children spend money on depends on their upbringing or the wealth of the family. Besides, how much funds a person spends is influenced by his or her gender; usually, girls are more frequent consumers than boys. The motives and ways of spending money differ very much between men and women as far as they have different aims, values, perspectives, and understandings of the concept of relaxing and entertainment. It is worth mentioning what exactly men and women spend their money on. First of all, women far more often indulge in beauty treatments and therapies, including those that help them to relax, boost their mood and self-esteem. Men, on the contrary, devote much less time and money to such things, and even more, the majority of them do not consider it to be that essential. Moreover, women are more likely to invest in friends, family, food, and housekeeping. Finally, they are more often involved in charity. Thus, women are generally aware of the importance of nutrition, family, and children, and that is why they dedicate almost all their resources and time to them (Nandanan). Women like to take care of their loved ones, and that makes them satisfied and happy.
Not knowing where the money comes from and having no idea that they need to be distributed rationally, children are not yet able to value and calculate them correctly. There is a belief that children’s spending habits and behaviors are not modeled after their parents. Adults commonly spend money, thinking, and calculating everything carefully and reasonably, while children are guided by emotions to satisfy their desires. If to give them the money and the choice to save or exchange them for sweets or toys, then most probably they will choose the second option. Besides, according to Bailey, it is believed that at the age of 5, children begin to develop some specific emotional reactions to spending and saving money; at the age of 8-13, they start thinking more rationally. It proves that all people develop their financial literacy independently. Nonetheless, the majority of people think that parents are an essential role model for their kids in all areas, including financial. Whether parents want it or not, their children are watching, memorizing, and subsequently imitating their behavior with money. Accordingly, it is an extremely critical task for adults to teach kids financial management. One of the most convenient ways to deliver the information is to demonstrate and be an example for them rather than to read long lectures on money management and immediately violate the rules mentioned earlier.
However, as it was already mentioned before, with age, people have more and more needs and spending, as far as responsibilities and duties. The average adult spends the majority of his or her income on housekeeping, shelter, food, water, electricity, clothes, fuel, which are, in short, essentials. If they are married and have kids, first of all, they have to think about the family but not their wants. Nevertheless, there is also a difference in how wealthy people are. If they earn enough and belong to the middle or rich class of society, they can afford to buy luxurious cars or houses, designer clothes and accessories, travel a lot and regularly have vacations in exotic islands. Still, there are those who do not care much and spend their money on entertainment just to satisfy their materialistic desires. More precisely, this is an example of the behavior of those who are not mature, serious, or responsible enough. Often, after having some fun and careless life, they are getting into debts or taking colossal loans; as a result, later, they are forced to limit not only themselves but also their families severely. All of these actions are the result of gross financial illiteracy that, fortunately, can be learned if a person has enough patience and desire. The other type of people is those who do not want their children to feel deprived, different, or worse than other kids. So, they also try to satisfy the expectations of others and raise their self-esteem, but this is a mask; in fact, they are not who they want to appear. If not to mention the kids, the situation will undoubtedly remain the same; taking the cars, houses, and vacations on loan, buying fancy and expensive things that take a very long time to earn for – these are just foolish actions of adults for the sake of appreciation of others. The main point is that they have to be extremely careful with this, as their children are observing, memorizing, and in the future, they will repeat these mistakes and think that it is okay.
The turning point in familiarizing the child with financial affairs is the period when parents start giving their children pocket money, and both the age of the kids and the amount given by parents play an essential role. Pocket money teaches children to make choices about spending, and here it is necessary to let them make mistakes, which will be valuable lessons for them in the future. Talking about the age when it is best to start giving the children pocket money, there is no clearly defined figure because first of all, it depends on what concepts about money are embedded in his or her head (Peachey). If they understand that money needs to be earned, valued, and saved, but not spent all at once – which will mean that they are left without any money until the next clearly-defined date when they receive it again, they are ready to start getting some cash. Besides, they can accept money as a reward for hard work at school, cleaning the room, getting some achievements; whatever they do – it will be a bit of an incentive and encouragement for them. The next issue is how much money to give to a child as pocket money. First of all, it all depends on how wealthy the family is, so for every family, this number will be different. The second argument is how children are, because the older they get, the more significant sum they need. Finally, it depends on what do pocket money should cover – just basic things like lunches and transport or some extra entertainment, fun, movies, or saving. The important thing here is not to spoil children because they will get used to receiving and spending as much as they want, and then learning how to make and value money will be almost impossible for them. Thus, the sooner children are accustomed to the habit of saving money, the better.
However, saving money is a habit that takes a long time and patience to develop, but it gives a feeling of confidence and control in any life situation; it also allows securing yourself with a happy and carefree future. Whatever happens, a person who has always been saving some money will always have the hope of solving unplanned and unexpected problems or incidents. The desire or need to study, to be healthy and have the right to proper treatment, the fear of sudden dismissal or retirement – these are the things that are sometimes difficult to anticipate and that require substantial mandatory investments. Unfortunately, nowadays, a person without a certain amount of money loses a lot of opportunities. Nevertheless, learning to save is not an easy task, and the most common mistake people make is when they spend some extra money on little things every time, believing that it is not that much and that they will not help or save them (Kennon). However, it is advisable to start with the small steps in achieving independence and competence in financial management. Forgetting and not thinking much about it, people make an immense error; saving even $1 every day makes a difference at the end of the year, and a few years of such savings will help you collect a considerable amount of money. The longer you are saving, the better. Additionally, if someone wants to become wealthy – good business is an excellent point to start. However, to invest the money, he first needs to save them. In the future, his so-called suffering and limitations will be rewarded, and he will not only get his money back but also earn a vast fortune. Moreover, wasting money on unnecessary things or unhealthy habits like smoking for adults and sweets or junk food for children, for example, also has a negative impact on people’s wealth and success. However, almost everything that people do today will influence their future life, health, and prosperity. An example of the unnecessary spending of money people do without not even noticing it are so-called personal vices. They include gambling, drinking, and smoking that was already mentioned above; less-obvious things are shopaholism and eating or drinking out. After all, laziness is one of the biggest deterrents to getting rid of these habits, and the sooner a person gets over it – the better.
Unfortunately, financial literacy very rarely is one of the subjects taught to children at schools. Many parents believe that this is not children’s business, while others do not have the time or the desire to have educational conversations with their children. This lesson would cover all the same aspects that parents should teach their children: earnings, savings, expenses, and loans. Therefore, the school would be a good source of knowledge for children in the financial sphere. Although this subject is recommended for all children without exception, at least in the beginning, it could be optional for those parents who want their children to start developing in this field. Eventually, for adults, who do not have the opportunity to study financial management at schools, courses are a good alternative. There are many courses on any subject now because they have become a trendy means of self-development. Thus, if there are people who do not manage to learn how to deal with money on their own and need a person who can teach and help them, then such courses are just what they need. However, most of them are not for free, but compared to how much people could save during their lives thanks to received knowledge and techniques – it is undoubtedly worth it.
So, nowadays, financial literacy is a vital aspect on which both peoples’ present and future life depends. That is why they have to know how to control their income and expenses skillfully, and only then will they be able to start saving. These skills should be imparted to the children from a very young age; otherwise, they will develop bad habits and understandings of financial management in general. Yet, it is not as important how children learn it – on their own, at school, or from their parents – the main thing is that they though master the financial field. Parents may also have not precisely the right beliefs about managing their finances and unknowingly pass these beliefs on to their kids. However, bad habits can be discarded, and good ones can be gained – the main thing here is the desire and patience of a person. Adults should make efforts to demonstrate and transfer their skills in earning, spending, and saving money to their children continually. Only in this way will new generations have the right understanding and value for money. Thus, with each age group that has proper knowledge and approach to financial affairs, humanity will become increasingly financially literate.
Bailey, Laura. “Children Develop Their Spending And Saving Habits By The Age Of 5”. World Economic Forum, 2018, https://www.weforum.org/agenda/2018/01/children-develop-their-spending-and-saving- habits-by-the-age-of-5.
Hastings, Faith. “How Do Children In The UK Spend Their Pocket Money?”. Family Money, 2018, https://www.familymoney.co.uk/life-experiences/money- magazine/pocket-money/.
Kennon, Joshua. “A Complete Beginner’s Guide To Saving Money”. The Balance, 2019, https://www.thebalance.com/the-complete-beginner-s-guide-to-saving-money-358065.
Padma Nandanan. “A Study on the Gender Differences in the Spending Attitude and Behavior of IT Professionals in Urban Bangalore.” International Journal of Business and Management Invention(IJBMI) 6.7 (2017), https://www.ijbmi.org/papers/Vol(6)7/Version-3/H0607035559.pdf
Peachey, Kevin. “How Much Pocket Money Should We Give Our Kids?”. BBC News, 2019, https://www.bbc.com/news/business-48790576.