Exclusive surveys: children and money in a digital age
In the first part of a series revealing the fascinating results of our exclusive surveys, we find out how kids of today understand money. With nearly half of pocket money now paid by bank transfer, the shift to a digital economy is clearly affecting us all.
We’ve all felt the shift. Say the word “money” and we may still think of coins and notes, but we’re far less likely to carry those around and use them. Money has been going digital, and our attitudes and habits are subtly changing with it.
That’s why The Times, in partnership with Lloyds Bank, has commissioned two surveys – conducted by independent polling agency YouGov – to help us understand the nation’s modern money practices.
This research has identified trends in how we think about and spend our money. It also shows what most concerns and excites us about our new digital lives. Look out for a series of features and Times Money Mentor videos over the next couple of months to unpick the results.
Our first survey, of 1,067 UK parents of children aged between 3 and 18, sheds light on our children’s changing spending, earning and saving habits as money moves increasingly online.
Andy Bickers, savings director at Lloyds Bank, says: “Never before have we had such immediate access to our money and financial information, giving people great power to engage with their money and make more informed decisions. It is important that young people learn good money habits for the digital age early on.”
But are parents and educators fully alive to this change? We need to be if we are to bring up the next generation with positive financial habits. That’s why this survey is so important. To support our children, we must first understand what is going on.
This launch feature looks at how British children aged 2-18 learn about money in a digital age. Among our findings are the fact that most parents think coins and notes should play a role in building understanding, yet nearly half now pay pocket money through bank transfer. We have also learnt that the vast majority of parents think schools should help to teach money values, and yet this rarely happens on a regular basis.
Our discovery that most children don’t know the price of everyday grocery items, and that a sizeable minority who spend online have been targeted by fraud, show that we do indeed have further to go. But with the right support, the opportunities presented by the shift to digital are many.
Bickers points to the Lloyds Bank Smart Start account for 11 to 15-year-olds* as a good place to start: “It offers young people the tools and technology to manage their money and prioritise how they spend and what they save for, while giving parents the oversight to help them if needed.”
*Parents/guardians need to have an existing Club Lloyds Current Account and be registered for Internet Banking
Growing up in an increasingly cashless age
As a result of the decline in cash and the rise in digital transactions during lockdown, fewer people handle physical money on a daily basis. According to the banking industry body UK Finance, contactless payments increased by 12 per cent during the pandemic, while the Office for National Statistics records that in May 2022, seasonally adjusted internet sales had risen to 26.6 per cent of all official retail sales, up from 19.7 per cent at the start of lockdown.
Gen Z and Gen A are growing up in an age of instant buying via online apps and in physical shops with contactless cards or fingerprint verification. Even their pocket money is often received in digital form: while half of the parents surveyed (52 per cent) still give it in cash, a significant number (43 per cent) pay it via bank transfer.
Naturally the proportion increases with age. Up to 11 years old – the age when they can open a bank account of their own – most children receive pocket money in coins and notes. By the age of 12, they are just as likely to be given money by bank transfer. That proportion rises to 62 per cent over the age of 16.
While this frictionless spending is convenient, is there a danger that it does not seem “real”? In our survey we asked parents if they felt coins and notes were important for their child’s understanding of finances, and 83 per cent agreed. But perhaps this merely reflects parents’ own lack of familiarity with digital money: those over 55 were most likely to agree; those in the 25-34 age group least likely.
Our children will be the first true digital money natives – able to spend at the touch of a phone, but also to keep track of their finances in detail at the click of an app. They may need some help navigating this new world, not least in protecting themselves and their money online (see boxout below) – but with that flexibility and control come great opportunities.
“With almost half of pocket money now sent digitally, young people need to find other ways to keep track of spending and saving, and there are plenty of options with the advent of money management apps,” says Bickers. “As we move to an ever-evolving digital world, it’s important that children are encouraged to engage and learn the value of money.”
Understanding the value of money
Are Britain’s children learning enough about the value of money in order to have a secure future?
Britain’s parents clearly don’t think so. According to the YouGov survey for The Times and Lloyds Bank, 90 per cent agree that schools should teach the value of money. Yet only 23 per cent think their children get to hear about money and basic finance at their college, school or nursery on a weekly basis – and 17 per cent say the subject is never touched on at all.
Schools in Scotland and, in particular, London – where 36 per cent of children are taught the value of money at least weekly – are notably more on the ball than the rest of the UK.
Proof that our children are not fully aware of what they are spending comes from posing a question that’s long been used to gauge whether politicians and celebrities are in touch with normal life: how much is a pint of milk? Almost 60 per cent of parents admit their kids don’t know the value of everyday groceries.
This might be unsurprising in very young children, but even for parents of teens aged 16-18 the proportion is 41 per cent.
“If your child has a digital bank account such as Smart Start, encourage them to check in regularly on how much they are spending,” Bickers advises. “Talking to children about finances can help them form a positive relationship with money and equip them with the skills they’ll need to make smart financial decisions for the rest of their lives.”
Learning to save
In our survey 93 per cent of parents strongly agreed or tended to agree that it’s important to encourage their children to save money. This was the case across all age groups of children, with parents of 9 to 11-year-olds expressing the greatest support.
The age of the parents also has some bearing on this. Those aged 18-24 were least likely to worry about the savings habit, with only two thirds (68 per cent) agreeing, compared with 95 per cent of 35 to 44-year-old parents.
The good news is that here, parental influence seems to be working. Two thirds (66 per cent) of children across all age groups are in the habit of putting money aside, with nearly three quarters (73 per cent) of 9 to 11-year-olds doing so.
“Pocket money can be a great way to start teaching children to be responsible for their own money,” says Bickers. “Doing jobs around the house to earn some cash and saving for a particular goal can all contribute to your child developing financial confidence.
“Smart Start also has a ‘Save the Change’ feature that you can turn on, where every time they use their debit card the amount they spend is rounded up to the nearest pound, and the difference moved seamlessly to the savings account.”
Children and online fraud
It’s well known that fraud is a significant problem for adults. Trade association UK Finance reveals more than £1.2 billion was stolen through fraud in
2022 – equivalent to £2,300 a minute. Its figures show that more than three quarters of fraud cases started online and nearly a fifth (18 per cent) came via mobile communications.
How are children affected by this trend? Startlingly, our survey showed that almost a fifth (19 per cent) of children who spend online have already lost money to scams when buying online. And despite the capital’s reputation as a hive of digital knowhow, Londoners were the most likely to drop their guard: nearly a third of London-based parents reported their child had been targeted, and 12 per cent said they had fallen prey to scams more than once. Children in the Midlands appeared to be the safest, at only 5 per cent.
A fifth of 5 to 8-year-olds are allowed to spend online: our survey indicates that this may be too young without careful instruction or monitoring. This particular sample size is smaller than the rest, with 37 parents of this age group allowing that freedom, so some caution must be applied to the result. But it’s still startling that 42 per cent of these children have been targeted by fraud – twice the average.
“As a parent, keeping your children safe is the ultimate priority,” says Bickers, “but it can be daunting when you don’t know what you’re up against. Making young people aware of the threat of fraud is a crucial first step in getting them to change their behaviour so that they are protecting themselves from scammers.
“Whether your child uses your debit/credit card or their own, it’s important to check in on what they’re spending to identify any unusual or risky transactions. Remind them that if they are ever unsure about a purchase they are making, or if something sounds too good to be true, then they should speak to you for advice before parting with their money.”
This is the first generation for whom digital spending is the norm. It’s crucial that we all consider how best to equip them for a healthier financial life.
For more information about the Smart Start account for children, search Smart Start from Lloyds Bank
Statistics source: YouGov, sample size 4,512 UK Adults, survey dates 29 to 30 June 2023
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