Credit Suisse Pocket Money Study: Learning How to Manage Money Properly
How can children learn to manage money well from the outset? As part of the 2017 Pocket Money Study, more than 14,000 adults from all over Switzerland were asked about this topic on behalf of Credit Suisse – with fascinating results. It was revealed that while parents certainly see it as their responsibility to teach their children how to manage money, priorities and values vary depending on the region, as well as other factors. The study also showed that children are more sensible than many parents would initially think.
Financial education plays a key role in Switzerland. But who is responsible for ensuring that children have a good understanding of how to manage money? And how do you make sure that children are set on a secure path toward financial independence? The Credit Suisse Pocket Money Study has addressed these questions and more. It involved more than 14,000 adults from Switzerland taking part in two separate surveys carried out by the institutes AmPuls and sotomo. Around half of the respondents had at least one child between 5 and 14 years of age.
Learning How to Manage Money: First Steps
On average, Swiss children are six years old when their parents first introduce them to the topic of money and managing finances. At the age of seven, children are allowed to make small purchases on their own for the first time and they start to receive money as a gift at the age of ten. It normally takes six years for the next milestone to be reached; however, the time taken can vary and also differs by language region. The study shows that parents in German-speaking Switzerland approach financial education in a different way compared to parents in French, Italian, and Romansh-speaking regions of Switzerland.
Financial Education Is the Parents' Responsibility
A responsible approach to money management is of central importance when it comes to financial security. So, what role should money play in life? Parents see this area very much as their own responsibility. Over the course of the study, interesting differences can be seen in terms of individual perceptions in this area. In addition to regional origin, these perceptions are predominantly influenced by income and political opinion. Teaching children how to manage money plays a greater role for parents with lower incomes (under CHF 50,000 per year) than it does for parents from the upper income groups (over CHF 200,000 per year).
of parents asked believe that they themselves should be primarily responsible for teaching money management.
Money and Values
According to the Credit Suisse Pocket Money Study, three key principles shape financial education in Switzerland:
- Money is an equivalent value for services provided.
- Money determines the limit of your own consumption.
- Money is not, however, the be all and end all.
It is therefore not surprising that most parents claimed to advise their children to manage their money in a sensible way. The phrase "Money doesn't grow on trees, you have to work for it" was the most popular with 77 percent approval. In spite of this, only a minority of 37 percent imposed conditions on the receipt of pocket money. In second place, with an approval rating of 64 percent, came the phrase "Don't live beyond your means" and in third place, with 63 percent, was "Money isn't everything in life" – the preferred choice among mothers and those from French-speaking Switzerland.
Money doesn't grow on trees, you have to work for it.
The guiding principle with the highest approval rating
Saving and Spending Money
Do parents encourage their children to be frugal? And how can parents carefully introduce their children to the challenges of consumer society?
Children should learn as early as possible not to live beyond their means. The study clearly shows, however, that only a relatively small number of parents teach saving for saving's sake as a core element of financial education.
Pocket money is of course an important aspect of financial education. Most children are allowed to spend it however they choose. A large majority of children regularly set aside at least some of their pocket money, even though they rarely have a concrete savings target.
Fulfilling Big Aspirations through Clever Budgeting
Not all parents were able to specify what their children wanted to buy with their saved money. Where the savings targets were known, they were generally electronic devices such as computers and means of transportation such as mopeds, for example. Parents also set aside money that their children would be able to access from a certain age. The reason for saving this money was mostly to finance education or to enable their children to learn to drive.
Financial Education: Facts and Figures
Age at which children first learn about money
Amount that a seven to eight-year-old has in their savings account (in CHF)
Percentage of parents who see banks as having a positive influence
Sources of Influence in Financial Education
Last but not least, the Credit Suisse Pocket Money Study asks the question of who, apart from parents, has an influence on children's financial situation – and how this influence manifests itself. From the survey, it is clear that parents generally consider siblings, grandparents, godparents, and other relatives as having a positive influence. On the other hand, 75 percent perceive the influence of other children as being negative on the whole. One reason for this may be that their children are influenced by their peers to desire consumer items that are not affordable. However, the media, idols, and advertising are seen as having the most negative influence. But what about banks? A majority of 56 percent believe that banks generally have a positive influence on their children when it comes to money management.