There’s been much fuss this week about Nigella Lawson and her statement in an interview with My Weekly magazine that she has determined to leave her children no money at all. Why? Because she wants them to understand that “you have to work in order to earn money”.
Not having to earn money, says Lawson – who the newspapers claim is worth around £15m – “ruins people”. This all sounds a bit harsh – most of us are desperate to give our children some kind of financial security – but she does have a point.
Study after study has shown that to be happy people need to be challenged: working towards a series of goals brings first hope and then, assuming they are met, satisfaction. Get everything given to you all at once, particularly at an early age, and you’ll never feel that hope or that satisfaction.
It’s a tricky one for parents. Well, it’s a tricky one for some parents: you’ve got to be reasonably rich in the first place to give much time to worrying whether you’re going to be leaving so much cash to your children that they’ll be ruined.
And, of course, most of us are not getting rich very fast at the moment. We are getting poorer. Most of us have only three planks to our wealth-creation strategies: our property, our shares and our salaries. The problem? They’re all going down. Our houses aren’t worth what they were this time last year and all the data suggest they’ll be worth even less this time next year than we think they are now. The number of mortgage approvals has now fallen below the levels of the mini-slump of 2005; houses are spending an average of 98 days on the market, says Henry Pryor of Primemove.com, twice as long as they were in 2002; mortgages are getting more expensive; and asking prices are off by well over 4% since October last year.
But it isn’t just the property market that is a mess – stockmarkets are too. They might be see-sawing all over the place, but the general trend – down – is clear. The FTSE 100 is off around 10% this year, the Dow has lost 7%, the European markets anywhere from 9% to 13% and the Hang Seng a really nasty 15%.
It’s hard to see how this can turn around. Most stocks still aren’t pricing the reality of recession in the US, where house prices are still falling at once unimaginable rates, and the knock-on effects of that throughout the emerging and developed worlds.
Then there are our salaries. They might look like they are on the up – recent numbers showed private-sector wages rising at 3.5%. But what good is that when we are paying anywhere from 40%-70% in tax (depending on our lifestyles); when energy bills are rising at 10%-15%; when food bills are rising at 12% on average; when council tax looks like it will go up at 4% a year forever; and when the Retail Price Index is at 4%? At this rate if you die in the next few years there’s more chance you’ll be leaving your money to the Halifax or Barclaycard than ruining your children with it.