Indeed a study by the influential London-based psychologist Adrian Furnham has found that low-income families tend to give their children proportionately more money than middle-income families. His study also found that pocket money rises fastest between the ages of seven and ten, and slowest between the ages of 15 and 18.21
Furnham’s study also showed that middle-income parents were more likely to make their children work for their allowance, an interesting finding given that these parents could afford to be more generous without expecting any help around the house in return. Though maybe parents in households where there is more money available feel that it is more important to emphasise the message that money doesn’t grow on trees.
There is no definitive proof on whether the middle-income parents are taking the right approach. Some studies suggest that a contingent approach, where pocket money has to be earned through completing homework or doing chores, is the best way for children to learn about money. Others find that a consistent allowance gives the child more responsibility for planning how to manage their own cash.
Then there’s the risk that once you monetise housework, your children won’t ever volunteer to help. (We’ll learn more about this issue, which affects adults too, when I turn to intrinsic motivation in Chapter 7.) Then there’s the problem that when it comes to exam time, you might prefer it if your children revised rather than washed up to earn their pocket money.
Some researchers in the field suggest it’s a good idea to explain the family budget to children as they get older, so that they can see where their allowance fits in to the bigger picture and how, if they want more money, it will have an impact elsewhere. Neale Godfrey, the author of parents’ money guides such as Money Doesn’t Grow on Trees, goes as far as to suggest that children’s pocket money should be treated in the same way as an adult’s income. She recommends 15 per cent should be taken away in tax and put into a general family fund. A family vote would then decide how it was spent. Another 10 per cent of a child’s pocket money should go to charity, she says. The child gets no choice about the amount assigned, but does get to choose the good cause. In this way children learn to become ‘citizens of the household’, Godfrey argues.
Not everyone will want to go to such extremes. What all parents should do, however, is be open and consistent about where pocket money comes from and what children can expect to get. And they should be able to ask for similar transparency from their children in return. Indeed there are even experts who have made the rather extraordinary suggestion that parents should ask their children to provide a yearly review of their spending so that they can see how this fits in the context of the family budget.
That said, in a study of 1,500 families living across the United States, almost two-thirds of young people between the ages of 12 and 18 said that their parents usually or almost always knew what they spent their money on. The study also found that those children who had to work to get their allowance were almost twice as likely to donate to charity. Surprisingly, family income didn’t make a difference to how much children saved or gave away. It was emotional warmth that mattered, with those children living in a warm family more likely to save up their cash, sometimes for their own college fees.22
Of course, as well as knowing how much you have, successful money management also requires you to know what it will buy you. Minna Ruckenstein’s research suggests nursery-school-aged children know the former, but not the latter. The kids she studied all knew the total amount of money they had and were very keen to tell her, even though she didn’t ask them. What they couldn’t work out was how their cash converted into spending power. When one child said they had $200, the others all agreed that this was a lot, but none of them knew what that sum might buy.
It is as children that we learn about the maths of money. There is evidence that a good conceptual grasp of maths leads to better financial management in adult life, and in the American study of families referred to above, children who were not good at maths were more likely to exhibit financial anxiety. By contrast, those who were best at calculation were more likely to donate to charity and to save for the future.
It all means that just as parents should talk about money more with their children, so they should also encourage them to master maths. It will help their children grow into adults who know how to handle money more wisely and to have a healthier relationship with it. What it won’t do is allow them to enjoy total control over money. Mind over money is always a matter of degree.
We’ve seen where our relationship with money starts. But where does it end? Money is more tied up with our thoughts about death than you might ever imagine.
THE ANTI-DEATH DRUG
Here’s a statement: ‘I am very much afraid to die.’ Would you say that was true for you, or false? Here’s another: ‘The thought of death seldom enters my mind.’ Again: true or false?
If you were to take part in one of the experiments run by psychologist Tomasz Zaleskiewicz in the Polish capital Warsaw, a further ten questions measuring your anxiety about death would follow. But Zaleskiewicz is not really interested in your attitudes to death. He’s interested in your attachment to money.
Before he starts quizzing people on their mortality, he sets them an exercise. Half the participants are given a stack of banknotes to count, while the other half get a pile of pieces of paper of the same dimensions as the banknotes, with numbers printed on them. The task is the same for both groups: to add up all the numbers. The result: people who count the money are less afraid of death. 23 Their fear is reduced by almost a fifth.
This isn’t what Victorian morality tales teach us, is it? In those stories, the old miser counting his piles of dusty coins is usually portrayed as wracked with mortal terror. It is the hero living in poverty who cares nothing for worldly goods who has no fear of the end.
Hanging in the National Gallery in Washington, DC, there’s a gruesome painting by Hieronymus Bosch in which a miser on his death bed reaches for a bag of gold proffered by a demon, even as death – in the form of a shrouded skeleton – appears at his door. Meanwhile an angel puts a hand on the miser’s shoulder, hoping to lead him down the route to salvation instead. To the medieval mind, this painting was not suggesting that counting money was a way to ward off fear of death. Rather it was the road to damnation.
Fewer of us fear hell these days. A more common fear is of nothingness, a great void. Perhaps that’s why we find it comforting to reach for something concrete; something measurable; something we like to think is reliable; something that will live on – money.
That at least is the idea.
Zaleskiewicz argues that money in general is an ‘existential drug’, by which he means a drug that relieves our existential angst. So that is why we seek to accumulate money, he says: it serves as a buffer against our greatest fear.
This may all sound unlikely. We’ve been told, most famously by Benjamin Franklin, that only two things are certain: death and taxes. Yet we know that however much we pay of the second we are not going to escape the first. ‘You can’t take it with you’ applies as much to money as our other material possessions. But of course you can pass it on, provided it’s not taken from you in tax. Perhaps that’s why some people object so passionately to inheritance tax. You have gone, but your children live on, and if your money doesn’t go in tax they will have it to comfort them – which is some comfort for you.
Zaleskiewicz and his team have also conducted their study the other way round: putting death before money, as it were. This time half the participants were asked to fill in the questionnaire about death anxiety at the start of the experiment. Then they were shown a series of coins and banknotes and asked to estimate their physical size. This group overestimated
