Consumer Corner: What should my child do with their Communion money?

Children will look towards their parents for guidance on how to manage their money

Despite the negative connotation that comes with the idea of someone having their Communion money when they’re older, it might not be as unbelievable as some might think. A child’s Communion is their first experience with significant amounts of money and as years go by, the level of money children are receiving is increasing.

Ulster Bank figures show more than one in 10 Irish children get €1,000 plus for their Communion, while a quarter rake in more than €800. That’s a lot of money for a seven or eight-year-old to manage. The research shows that nearly half of children said they didn’t keep all the money to themselves and share some with their siblings or give some to charity. On spending, two in five spent their money on toys while also on the spending list were clothes, computer games and sports items.

Children will look towards their parents for guidance on how to manage their money and it may be hard to know how to strike a balance between spending and saving. Of course there are many options available to children now as places to store their money from An Post to the Credit Union to banks and Revolut. It will certainly be worth your while doing some research on the options available but also this could be the perfect opportunity to start the ball rolling with helping children understand how money works.

Daragh Cassidy of Bonkers.is said that wherever kids put their money, this will be the first time most of them will have seen so much money so he says it’s a good time to try teach them money savings habits and the importance of saving.

“Someone still having their Communion money in later life is a common joke a lot of people make to try say someone is stingy but there’s a lot to be said for keeping the money for a few years until when the child might have better use for it. 

"A young teenager looking for their first smartphone or money for their favourite band’s concert tickets might value the money a lot more than a seven or eight year old.” 

John Lowe of the Moneydoctors.ie says parents could consider giving their child a savings account from the Post Office, Credit Union or bank on their Communion Day. 

Also he says children should be made aware that they now have independent wealth and can afford things like buying their parents a birthday present from their own money or a present for their sibling or friend. Also for trips to the cinema they could be encouraged to buy their own sweets and share that with their friends or even on a family holiday they could buy a round of ice-creams from their money.

They should also be encouraged to go grocery shopping with Mum and Dad, which is an eye-opener and so much to learn on this outing.

Frank Conway of moneywhizz.ie says that a good general approach to money is the 50:30:20 rule. He says that he recommends to adults in general that, if they can, they should have 50% of take-home pay for life 'needs', 30% of take-home pay for life 'wants' and 20% of take-home pay to be saved for future needs.

“For families that participate in the act of first holy communion, it's a special time. It means kids are growing up and have reached a milestone in their own lives. For some families, this has a deep spiritual meaning and for others, less so. It's somewhat the same when it comes to money. 

"For some families, they view money in different ways. For some, it’s about using it for today’s wants and future needs. For others, it's all about the here-and-now.” 

“For children at holy communion time, they are at a critical time of their lives. It's that golden period where teaching them certain facts and encouraging certain values and behaviours are important. So, I think for parents teaching them that patience, planning and saving money are really important life skills, this will be an important life lesson, that money is finite.

Mr Cassidy says that all the main Irish banks offer savings accounts aimed at children which have a competitive rate of interest and are a good place for a child’s Communion money.

“Some have a relatively low maximum allowed balance but most kids will only have a few hundred or perhaps one or two thousand in Communion money so this shouldn’t pose a problem.” 

EBS’s Children’s Savings Account offers a fairly decent 2.51% rate of interest. You can save up to €5,000 in total and it’s a very flexible account. You can save either one lump sum or put in several deposits and you have pretty much instant access to your money. The maximum age of the account holder is 11 so it’s a good option for putting Communion money somewhere, says Mr Cassidy.

AIB’s Junior Saver Account offers 3% interest on amounts up to €1,000 and is for kids between 7 and 11.