Careful, kids – he’s Mr CHEAT
How city slicker ‘Rich Ricky’ is helping children understand the dangers of financial fraud
PEOPLE of all ages are regularly falling victim to financial fraudsters. As much as £2 million a day is lost this way. But now action is being taken to help children as young as seven to wise up to the threat of financial fraud in the hope that when they become adults they will be more savvy.
One idea is a new game, based on the idea of ‘once bitten twice shy’, designed to ensure youngsters are made aware of the dangers of financial fraud.
While most children who have so far played the game are taken in by the fictional scam, it is hoped the experience will help protect them in the adult world.
Called Easy Money, the game features ‘Rich Ricky’, a briefcase-wielding, braces- wearing city slicker who ‘ guarantees f r ee money’ to youngsters who take part. Rich Ricky tells them that if they give him (a virtual) £100 he will invest it and double the sum by the end of the game.
The children receive regular phone call updates from Rich Ricky throughout the game, telling them that everything is going to plan – but that he needs more money. This is what is known in the investment fraud trade as a Ponzi scheme – where returns are paid out to early investors by using the money paid in by more recent investors.
Eventually, it is revealed to the children that Rich Ricky – like the i nfamous American f raudster Bernie Madoff who employed such tactics in real life – has ended up in jail and lost all their money.
Rob Gardner, pictured below, is founder of pension consultancy Redington and co-founder of RedSTART, a financial education charity that devised the game. He says: ‘ We have played the game with more than 500 pupils and they were almost always taken in by Rich Ricky’s offer to provide better returns than anywhere else.
‘ One by one they realised that something was not right but not before they handed over a large amount of money.’
He adds: ‘The game teaches young people that scams exist and that if they are not wary they will get taken in and lose some or all of their money. We believe teaching kids this vital lesson within the safety of the classroom is a great way to prepare them for spotting scams when they are older.’
But alerting children to the threat of scams is only one part of preparing them to meet the challenges of a complex financial world. Here are the key lessons experts say children – and adults – need to learn.
BEGIN EARLY
GARDNER feels strongly about financially equipping children. He refers to his own experience of living as a young boy with his parents in inflation-ravaged Argentina in the 1980s as motivation.
He says: ‘ Prices in Argentina would go up even while we were going round the supermarket, so we had to move fast. It was like a supermarket sweep.
‘The key is to teach children how to earn money, keep and grow it. That includes learning how to fend off the impact of inflation as well as repel scammers.’
HOW THE STATE HELPS
THE introduction of financial education in schools has been slow. The subject has been part of the secondary school curriculum since 2014. But only about 40 per cent of schools teach it, often within mathematics or citizenship classes.
Academies and free schools do not follow the national curriculum, yet half provide some form of financial education.
Money teaching is not yet a statutory requirement for primary schools although a consultation is under way to include it as part of personal, social, health and economic education (PSHE).
Russell Winnard, of financial education charity Young Money, says: ‘ Many primary schools deliver financial education through other lessons such as numeracy.’
BANK OF KIDS
EARNING and managing money is arguably the best way for children to improve money skills.
New research for The Mail on Sunday indicates that the younger generation receives £6.8 billion a year by way of earnings and financial gifts. This gives them plenty of opportunity to learn about the importance of money.
Putting a little money aside regularly is the first step to instilling good savings habits.
Craig Donaldson, chief executive of Metro Bank, which compiled the survey, says: ‘It is important to show children that money does not grow on trees. But at the same time this life skill should be taught in a fun way.’
He also points to t he bank’s own ‘ magic money’ machines in branches which count coins poured into them. They also provide prizes (such as Fidget Spinners) to those who guess closely the total value of coins banked.
Children who come in to a branch five months in a row to have coins counted before being put into their savings account are given a bonus of £5.
The bank also sends staff into local primary schools to deliver money lessons. He adds: ‘The world has got more challenging for kids. For example, they might buy a game for a PlayStation 4 that will cost £50 which is a lot of money.
‘ But there are then additional costs for using the game which can be 99p here or £1.99 there.
‘ It can soon get out of hand.’
CHILDREN’S SAVINGS
BANKS and building societies often pay their best rates to youngsters to stimulate a good savings habit – and encourage them to stay when they become adults. Some Junior cash Isas (Jisas) pay more than 3 per cent tax free whereas the best adult cash Isas pay nearer 2.25 per cent. Standard children’s accounts also pay as much as 3 per cent for instant access compared to 1.3 per cent for adult accounts. In the past, the Government went as far as giving children a bonus to invest in a Child Trust Fund account – the precursor to Jisas – to stimulate long- term saving. This was given to children born between September 2002 and January 2, 2011. Young Money’s Winnard warns parents of the oldest of this cohort to start money conversations with their children as soon as possible.
These children received at least £250 free from the Government to save, either in cash or shares. The accounts can still be topped up by a maximum of £4,128 a year until age 18 when they pass to the children for them to do with what they please.
Families need to gear up for this deadline in less than three years’ time, when some children could enjoy a wind fall of £40,000 or more.
Sixteen is also a key age as this is when children are allowed to take control of their account. Although they cannot cash it in, they can plan what to do with the money in two years’ time.
Winnard adds: ‘ I do not think there has been enough done to explain to children how to manage their Child Trust Fund. There is a danger many could simply fritter the money away.’