The bank of Mum & Dad - savers or spenders?

Friday 7th September

Show your children this academic year how to be 'Money Wise'.

New research from Hibernian Life has revealed that 62% of parents give their children pocket money as they need it, rather than provide a set allowance each week, revealing that we now give our children what they want when they want it.

Whether parents realise it or not, children’s attitudes and values about money are influenced by their parents spending and saving habits. If the majority of parents give children money whenever they ask for it, what message are we sending our children? Developing the basis of money management is important for our future generations to show our children the responsible way to earn and save.

The findings show that just 17% of parents give their children a set amount of pocket money each week with 5% giving a set amount and supplementing it with more cash on an ad-hoc basis. 15% say they don’t give pocket money at all. The findings also show that over half of the children spend all their pocket money, with 28% spending some and saving some and just 16% saving their pocket money.

Gareth McQuillan, Director of Product Development and Marketing, Hibernian Life said: “Giving children a set allowance guides them in the right direction towards making spending decisions and it also educates them on the importance of saving. Learning how to manage money instead of just getting it and spending it all at once without a thought for tomorrow is a valuable lesson for our children. It will help them grow up with the confidence to manage their own financial affairs.”

The research found that primary school students receive on average €10 per week, with secondary school children receiving €20 per week and third level children receiving €68 per week from the ‘bank of mum and dad’.

Interestingly, 69% of parents are themselves saving and are therefore in a good position to pass on the savings habit. Worryingly though, only 20% of those surveyed are saving for their children’s education yet 79% feel that the cost of education has increased over the last two years.

This perception is reality with Hibernian’s research also showing a substantial 28% increase in the cost of education since conducting its 2006 survey. The cost in 2006 of supporting a child through primary, secondary and third level education was estimated at €27,986. This compares with €35,809 (1) based on 2007’s research.

On average, the non-fee cost which parents will face for their children’s education in 2007/2008 is €1,037 for primary school and €1,416 for a child in secondary school. For those parents whose children continue education at third level, the non-fee cost is estimated to average €5,109 per student per annum (including costs of rented accommodation). Parents estimated these costs based on the common items they need to purchase for their school going children such as school uniforms, shoes, books and after school activities.

Hibernian estimates the cost of a third level education in the year 2020 at almost €35,000 (2) With such increases in the cost of education, it is important that parents consider starting to save now for their child’s education and maybe even encourage their children to save too! Gareth McQuillan advises ‘saving as little as €150 (3) per month over a 13 year period could ensure this cost is covered. With the new school year upon us, marking the beginning of a thirteen-year spending spree for parents, or up to seventeen years for parents of children who go on to third level education, this is the perfect time to begin to save to meet those costs later on.”

Media enquiries:

Alan Tyrrell
+ 353 1 898 5452

Notes to editors:

1. The figure of €35,809 does not include allowance for inflation or population changes. It assumes eight years in primary school, five in secondary school and four years in college.
2. Based on €5,108.70 x 4 years and assuming inflation at 4% per annum = €34,134.
3. Investing €150 in Hibernian Spectrum Saver Plus, indexing at 5% per annum, could provide €35,000 in 2020. This rate is for illustrative purposes only and is not guaranteed. Actual investment growth will depend on the performance of the underlying investments and may be more or less than illustrated.

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