Member Article

Tooth fairy pay gap shows financial challenges start in childhood

Some of our first experiences with money as children – from the tooth fairy to weekly pocket money – are key indicators of our future financial challenges and successes, according to research from HyperJar, a new money management app.

The research reveals the pay gap starts much earlier than our working lives – at age five – with women receiving only £1.40 from the tooth fairy compared to men who were given £1.70.

Higher earners - those with an income of £75,000+ - were more likely to have been savvy savers and expert negotiators as children: almost half (44%) said they saved their pocket money compared to 34% nationally; and nearly a third (31%) successfully negotiated a pocket money pay rise from their parents, compared to only 16% nationally.

As adults, the research shows we then struggle with four main money challenges, the biggest of which is a distinct lack of comfort around talking about finances (22%). Almost a fifth of people (18%) said they were suffering financial planning fatigue, while over one-in-10 (14%) respondents also cited a lack of time and attention as a key financial stumbling block. Finally, almost a fifth (17%) said impulse purchasing was their biggest challenge when it comes to keeping on top of their finances.

Mat Megens, CEO and founder of HyperJar, said: “It’s easy to think we’re fated to be ‘bad with money’. This report shows people have an awkward relationship with their finances, and it’s not just those on lower incomes. Of those earning £75k+, less than a third say they have a healthy, happy relationship with money or feel in control of it.

“Many of our challenges stem from behaviours and habits formed when we were growing up. Only 13% of us say our parents had open discussions about money in the family home, so it’s no surprise that we’ve been conditioned from a young age to view money as taboo. The unfortunate reality is that these views don’t magically change when we became adults. The positive news is that given the right tools – that make managing money as engaging and rewarding as spending it – anyone can take control and feel better.”

The social media effect

Beyond our childhood money management, the research also uncovers the relationship between social media and our financial habits, with heavy users of social media (six plus hours a day) reporting higher levels of financial anxiety and lower feelings of control over their money than light social media users (one hour a day or less). The top findings also showed that:

• Heavy social media users are less content with what they earn – only 12% said they’re content compared to 46% of light social media users • Heavy social media users have less control over their money – just 24% say they’re in control compared to 55% of light social media users • Heavy social media users were more likely to be excited about splashing the cash post Covid-19, with nearly a fifth (18%) saying they can’t wait to blow money on things they enjoy, compared to only 2% of light social media users

A nation of financial introverts

According to the findings, our ‘Britishness’ also makes money a taboo subject, with Brits feeling uncomfortable, embarrassed or too nervous to touch the topic, even when talking to those closest to them.

In fact, most of us would prefer to talk about almost anything else. People would rather discuss politics (66%), how much they weigh (61%) and their mental health (59%) than broach the topic of how much they earn (52%), ask to be repaid money (42%) or ask to borrow money (34%).

And when it comes to finding themselves in difficult situations, people say asking a friend to pay them back would make them far more uncomfortable (48%) than asking for relationship advice (10%). A further 55% of people say that they feel more uncomfortable asking to borrow money from a friend, than asking how they voted in an election (7%).

Mat Megens continued: “Much of the financial industry makes money when we spend impulsively, don’t plan ahead, avoid tricky money situations or let ourselves get overwhelmed by our finances.

“We all have those ‘money monsters’ on our shoulders that can get in the way of us improving our relationship with money, but we all also have the potential to build a happier, healthier mindset around our finances. We just need the financial tools that help us to plan for the future, and give us clarity, control and confidence.”

Behavioural economist Dr Nick Southgate explains our relationship with money management: “We have an easy debt culture and the opposite saving and planning culture. But I think that’s just because the financial sector has created easy ways for us to borrow and spend almost without thinking.

“Apps and the data they collect can illuminate our spending and saving habits and this should help us to become the financially competent individuals we want to be, rather than being buffeted by impulses and half instincts about how much money we have and how much we’ll have in the future.

“Of course, we’re not all the same and some of us are more impulsive than others, but our behaviour isn’t just driven by what we want to do – it’s driven by what we can do. I really think it’s the opportunity that creates more positive behaviour, and not just how people want to behave. Personality isn’t destiny - opportunity is.”

This was posted in Bdaily's Members' News section by Hyperjar .