The FINANCIAL -- Almost all parents in Switzerland believe that the financial education of children is important – but which standards should be applied? How much pocket money should children be given? A major study commissioned by Credit Suisse and Pro Juventute reveals that the views of people in the German-, French- and Italian-speaking regions of Switzerland often vary significantly – in fact, the regional differences in the approach to pocket money are striking.
A responsible approach to money is an important educational objective in Switzerland. Almost nine out of ten parents regard financial education as important or even very important. What's more, these parents believe that teaching their children to manage money sensibly is even more vital than encouraging them to be successful, modest, or creative. These are the findings of the "Swiss Pocket Money Study – How Children Learn to Deal with Money," a survey by the research institute sotomo and amPuls, which was commissioned by Credit Suisse in cooperation with Pro Juventute in spring 2017 and involved more than 14,000 participants.
Linguistic Divide on Pocket Money
According to the study, children in Switzerland are generally expected to understand money as a means of payment from the age of six. A year later, at the age of around seven, more than one in every two children (56%) receives pocket money. However, the study identifies enormous regional differences: While 63% of all seven-year-olds in German-speaking Switzerland receive pocket money, the figure for French-speaking Switzerland is just 18%. In the Italian-speaking canton of Ticino, the difference is even more pronounced: Here, parents say children do not have an understanding of money as a means of payment until the age of eight.
In French-speaking Switzerland, pocket money only becomes the norm at secondary-school level. Even at this stage, however, 30% of children do not receive any pocket money. In German-speaking Switzerland, on the other hand, just over 10% of children reaching secondary level do not receive any pocket money. Given that children are introduced to money at an earlier stage, it is unsurprising that parents in German-speaking Switzerland give their children access to pocket money and cash gifts at a significantly earlier stage, i.e. from the age of eight and ten, respectively. In French- and Italian-speaking Switzerland, this occurs two years later on average, i.e. at the age of 10 and 12, respectively.
Children Are Careful about Money
Although most children have access to their own pocket money by the time they reach the age of 12 at the latest, very few of them spend it all: 43% set more than half of it aside, and 41% save at least a smaller amount. They tend to save their pocket money in order to purchase electronic gadgets, especially computers and smartphones – but also Lego. Only 16% spend all of their pocket money. In that context, the amount of money the average child in Switzerland can access is remarkable: Where children in the 7-8 age group have savings, the average amount is CHF 650; in the case of the 13-14 age group, the figure is CHF 1,410. Clearly it is not just pocket money but also cash gifts that have been saved, given that an 8-year-old child receives an average of CHF 7 every month, and a 12-year-old receives CHF 23.
Parents with children aged between 5 and 14 consider monthly pocket money of CHF 16 to be adequate for a 10-year-old. But here too, there are regional differences, with parents in Ticino being the most generous: More than 40% consider pocket money of more than CHF 20 a month to be appropriate. In German-speaking Switzerland, only one quarter of parents would agree.
Although pocket money is a component of financial education, it is not usually subject to conditions, according to participants in the study. Approximately two-thirds of children (63%) receive it without having to do something in return. Although the majority of parents expect children to help out in the home, just over one-third make pocket money dependent on them completing small chores. In nearly four-fifths of these cases, this involves helping out in the home, tidying up, or looking after the family pet.
Should pocket money run out, around half of all parents remain steadfast and refuse to provide their children with additional cash. 27% indicate that they would provide the child with extra money but only if there were conditions attached. In contrast, nearly one quarter of those surveyed said they were generous and would make up any shortfall without imposing conditions.
Unanimous View among Parents: Start Early
Despite the regional differences in pocket money practices, parents in Switzerland agree on one thing: Children should be taught how to handle money from an early age.
"Paying pocket money on a regular basis can play an important role in enabling a child to develop a responsible approach to money. It is an effective means of training children to prioritize their consumer preferences because they can take responsibility subject to certain rules and make their own decisions. That includes finding out that not all of their wishes can be met straight away. These are important lessons for children – including in terms of debt prevention," says Katja Wiesendanger, Director of Pro Juventute, with regard to the findings of the study.