ResearchYoung children need to be taught much more wisely in doing banking matters. Rabobank and Nibud advise this. Digital transfer of pocket money is now the most normal thing in the world, but it also requires that young people become familiar with the safe use of a banking app, savings account and debit card at an early stage.
Digital banking is an indispensable part of financial education
Only the youngest children still predominantly receive pocket money in cash, according to research by the National Institute for Budget Information (Nibud) and the bank on Monday. However, parents quickly switch to digital pocket money, especially when they notice that others are doing the same. It is also easier to deposit something at a fixed time.
Children must therefore learn to use a debit card and a bank account as quickly as possible. Yet less than five years ago, parents are now less confident that their offspring are using these drugs safely. And most parents know what online phishing (fishing for financial data) and skimming (illegally copying payment methods) is. They have also heard of money mules (someone who lets criminals use their account and debit card). Yet the vast majority do not talk about this with their child.
Talk without judgement
Nibud director Arjan Vliegenthart: “Young people’s money is being used in all kinds of ways. You can’t blame them if things go wrong. It is important that no one should be ashamed of this, not even parents, but that they talk about it with each other without passing judgment,” says the expert.
“Digital banking is an indispensable part of financial education,” adds Michiel Kwaaitaal, head of payments at Rabobank. According to him, banks find it important that children quickly become familiar with money in this digital age. However, not all children with their own bank account use a banking app, even though it is wise to do so. Kwaaitaal: “Parents then watch via their own banking app.”
Of the children with their own bank account, only 55 percent also have their own savings account. The budget institute advises parents to open them. Ultimately, Rabobank and Nibud want young children – partly because of this – to be aware of the value of money, in order to prevent debts or unsafe financial behavior in the future. They need to know what cyber dangers are lurking.
Increasingly digital
In five years, the percentage of young children who receive their pocket money digitally has risen sharply. Only 70 percent of 6 and 7 year olds still receive cash pocket money. This is only half of 8 and 9 year olds. The older the older, the more happens via online banking, according to research by Nibud and Rabobank.
In 2018, 77 percent of young children received all their pocket money in cash, now that is half. The rest receive it either completely digitally (28 percent) or partly digitally and partly in cash (22 percent). Only the youngest children still receive predominantly cash pocket money. The main reason for this is the tangibility of cash.
Currently, 93 percent of parents regularly give pocket money. They were also asked how much they give to their offspring. The conclusion is that the amount of pocket money has increased for the first time in years. For example, a 7-year-old now receives between 1.40 and 2.30 euros, in 2018 that amount was between 1 and 2 euros. The increase is even higher for 11-year-olds: they received between 2 and 2.30 euros then and now an amount between 2.30 and 3.50 euros.
Gain experience yourself
Just over half of the children have a bank account that they can access themselves. “The best way to learn how to handle money is to gain experience yourself,” says Kwaaitaal from the bank. “Pay for an ice cream yourself, save for that skateboard or the game you want.”
The research also shows that children who receive pocket money are more concerned with money and financial matters than children who do not receive pocket money. For example, they more often have their own bank and savings account with a debit card, they are more likely to make debit card payments and online payments and they check their balance more often themselves. They also make a savings plan more often and do chores more often.
Vliegenthart (Nibud): “When it comes to dealing with money, the following really applies: learned young, done old. Once children have a bank account, it is important to become familiar with everything that comes with it as soon as possible. Only then can you make good use of it.”
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