This shouldn't surprise anyone who knows what impact inflation has had on their own earnings and savings over the past 30 years. What a tenner could buy back in 1978 has little in common with what a tenner buys today; our children are simply reaping the inflated rewards of an inflated money supply, as well as the fact that people genuinely have greater financial resources than they did back then.

Nevertheless, the average seven and eight year old (74%) can expect at least n150 worth of cash gifts for their Holy Communion, says NIB. (This sounds rather low; in my neighbourhood the kids say they'd be disappointed if they didn?t receive at least n500-n600.)

Almost half of First Communicants intend to spend their money on mobile phones, reports the survey, though the good news for the bank is that 86% of respondents already have a junior savings account of some sort.

The banks, naturally enough, emphasise the importance of encouraging these lucky children to keep saving. It?s a message that has clearly been taken on board already by many parents (and probably grandparents too): 74% of the existing young savers started doing so by age six.

And while it is heartening to hear that the under-12s don't intend to blow all their First Communion money, parents still need to ask themselves just how much of this fund they should make available to their youngsters.

Is it acceptable for a seven or eight or even 12 year old to be spending n150 or n250 or n500? Should they really be allowed to decide for themselves what they can and cannot buy, such as a mobile phone, which involves on-going top-up charges, or a personal computer or games console? Should a child be allowed to buy themselves an expensive pair of runners that you would otherwise probably not buy for them, because they happen to have the money?

Whatever your views about child-consumers, the huge volume of cash that they will receive if they are First Communicants is a reality.
It might be a good idea to set some limits now, before the cash comes rolling in, on how much they will be allowed access to, how much must be saved and perhaps even how much they, in turn, should give away to a charity or even a good cause of their own making.

Dividing cash sums by thirds is one way to accomplish this, though again, n200 to spend on themselves may be excessive if you do not have clear and appropriate guidelines in place for such money.


If you do not already have a savings account in place for your child, you should consider opening the highest yielding one possible for the relatively small sums they will be receiving and saving.

An Post's savings certificates and bonds are yielding 3.37% per annum net for their five year Childcare regular savings account; NIB pay between 3% and 3.75% on sums from n100 to n1,000 and RaboDirect pays the same 4.3% gross interest to its junior account customers as do all credit unions.

The branded children's accounts, like the resurrected Henry Hippo 'urfirst' account, pays its young customers a disappointing 2.3% gross interest, a return that is not exempt from the 20% deposit interest retention tax.

Once n1,000 accumulates in a child?s savings fund, parents should consider alternative assets to deposits. Unless the family needs this money themselves you could consider investing the bulk of the money in a long term, low cost investment fund, such as a index fund (which tracks the performance of a stock market index or sector or an ETF (Exchange Traded Fund).

Don?t automatically discount some of the higher risk funds, like an emerging markets India or China perhaps - or energy or commodities funds. Yes, these funds are volatile, but the returns can also be much higher than a conventional managed fund. (See Quinn-Life.com and RaboDirect.ie for a selection of relatively low cost but higher risk index and managed funds.)

You could even consider buying precious metals for your children (gold or silver coins) which, while not paying an annual dividend or return, do act as the ultimate store of value, especially during turbulent economic or inflationary times such as now. (See www.gold.ie for background and methods of purchase).

Every child and family should enjoy their First Communion; but not letting it become dominated by the cash gifts is the parents', not the child's responsibility.

What is heartening from the NIB survey is that 94% of parents admitted that they became more conscious of managing their own finances better after having children. There's hope yet that they can pass that lesson onto their children.