Children really do believe that money grows on trees

A pint of milk costs £5, an interest rate is how interesting the bank thinks you are, and money comes from heaven '“ that's what kids aged 7-12 really think, according to a new study by pensions advice specialist, Portafina.

Monday, 24th April 2017, 11:28 am
Updated Tuesday, 9th May 2017, 6:51 pm

Portafina quizzed over 1,500 kids to find out if they have even a basic understanding of cost, value and wealth. It also asked how many could confidently explain basic financial terms such as; ‘interest’ and ‘pension’.

Whilst it may come as no surprise that many kids aren’t experts in the field of finance, the study results highlight that awareness isn’t increasing as children get older – with the majority of 12-year-olds just as unsure as those aged 7.

More than a fifth of the kids polled thought that money was ‘free’ or ‘comes from a tree’ or even ‘from heaven’. One 10-year-old from Edinburgh suggested that money was delivered ‘by magic fairies’, whilst an 11-year-old from Manchester believed money was gifted by ‘a genie’.

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Despite being aware that money is earned from work, the kids expectations about income were consistently optimistic, with two-fifths (40%) confidently stating that their teacher takes home a staggering £200,000 a year – if only!

Spend was also a challenge area, with a quarter (25%) believing that a weekly shop for two people costs as little as £10, yet a pint of milk is £5.

When asked about what makes something valuable, the responses varied between, ‘if it’s rare’, ‘if it’s big’, ‘if it glitters’, and even ‘if Grandma has it’. Some of the kids felt that an item’s value depended on how happy it made them feel, or how fun they thought it was.

Pensions were also a baffling topic, with clarity over who may have a pension, (namely ‘nanna and grandad’) being the only consistently accurate answer. One 10-year-old from Sheffield suggested a pension was something that would allow ‘Grandad to go to the pub’ and a 7-year old from Leeds felt it was something ‘that the Queen has’ in order to ‘buy jewels’.

When asked to explain what retirement is, around a fifth (19%) of the children believed that it allowed you to ‘go on holiday more’, ‘watch TV’ or ‘sleep’. The remaining 80% were utterly stumped!

Dave Benson, Senior Lecturer in ITE, University of Derby said: “Learning to understand, use and appreciate the importance of money is an incredibly complex process and clearly not restricted to childhood. In an age of debit and credit cards, experience of ‘real money’ has become limited. When did you last send your child to the corner shop? Not surprisingly, the challenge is great.”

Jamie Smith-Thompson, managing director at Portafina, said: “Money management is confusing and challenging for the average adult, so it’s no surprise that this is the case with children too.

“We’re big believers in encouraging kids to understand money from an early age – many of us here at Portafina are parents, and we’re undertaking this challenge!

“It makes sense that being open with children about value and wealth, and explaining basic terms, is sure to set them on the right path for the future, and you can teach them slowly, without stripping the innocence and joy from childhood. You can even make it into a game.

“We speak to adults every day who are so incredibly confused by pensions and savings that they’ve buried their heads in the sand for years, and may now face a financially challenging retirement due to lack of preparation.

“What this study has reinforced is that basic financial education is more important now than ever. It gives our children their best chance to create the fantastic future lifestyle we all want them to have.”

Find out more about Portafina at or watch a video of Year 2 (age 7) schoolchildren discussing money, savings and pensions here: