Financial matters baffle the young

27 July 2004
A new study into financial literacy has proved that children, in fact, do say the funniest things.

According to some of the 4,000 children, aged between three and 16, asked being "in the red" means someone is very angry, a "pin number" is something you sew with, and "paying tax" means the cab driver gets his fare.

It was part of Britannia Building Society's study into how early children develop an understanding of basic financial issues.

Its findings revealed that one in ten children still do not know what a mortgage is by the time they reach the age of 16. A staggering 21 per cent of 16-year-olds remain confused about when and why they would need a pension.

But 75 per cent could confidently state that a pin number is a "personal identification number", whilst one in five were unsure how they would use a chequebook.

Less surprisingly, mortgages, pensions and current accounts remain totally lost on three to seven-year-olds. However, this did not stop them from guessing at the answer.

Some of the more imaginative responses to why people should get a mortgage included: "to measure the rain", "when I get dead" and "if you were sick".

Similarly, when faced with the issue of pensions, some of the children felt it would "help them become a grandma", or mean "getting a new pet". As for a current account, this was considered to be "fruit cake", "a biscuit", or "raisins".

Britannia's group chief executive Neville Richardson commented on the findings, saying: "Some of the things the children said are really funny however there is a serious point which has come through."

"It's very revealing that some kids at school leaving age, about to make major financial decisions, lack the necessary knowledge. This is why Britannia has been calling on the government to make financial education a compulsory part of the national curriculum."