Debt consolidation service Money Advisor has found that 84% of people in the UK think children should start learning about money in primary school.
This new research comes in the same month that the credit rating agency Moody’s warns household debt could leave Britain’s lower-income families dangerously exposed:
“Inflation, triggered by the low pound, is now rising faster than wage growth and has put growing pressure on households, squeezing budgets and causing credit card spending to increase and savings to fall.
The Bank of England has expressed concerns over surging levels of unsecured consumer borrowing on credit cards, which is going up by more than 10 per cent a year and outstripping income.”
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At this difficult time how do we ensure future generations are prepared for turbulent financial times ahead?
From 2013 finance education became compulsory in secondary schools, but an investigation by the London Institute of Banking and Finance found that the majority of pupils do not receive this education. The research also found that teenagers had unrealistic, inflated expectations about their future earnings.
This lack of real-world experience was also highlighted by a report from theBritish Chamber of Commerce, which found that young adults are not equipped well enough for working life, with 57% lacking soft skills such as communication, resilience and team work.
Financial education isn’t compulsory in primary schools, but a parliamentary report in 2016 recommended children should learn about money matters from primary level as financial education “should not be a ‘postcode lottery’, with some students left out simply due to the school they attend.”
This is a stance that Andrew Petros, Senior Financial Solutions Advisor of debt consolidation service Money Advisor, agrees with:
“Educating children around finance can help to avoid much bigger debt problems later in life.
We understand that many parents don’t want to burden their children with money worries, but encouraging a positive, healthy discussion around saving and spending from a young age can really help to create those long-term habits – as well as teach children other useful values such as patience, responsibility and independence.”
Russell Winnard, Young Enterprise Head of Educator Facing Programme and Services, said:
“Financial capability is an essential life skill. A lack of financial education can affect nearly every aspect of a young person’s life, from their mental wellbeing to their performance at work and even their personal health.
With money habits set by the age of seven, effective financial education from an early age can teach young people the differences between good and bad debt and help young people avoid behaviours which lead to bad debt.”
Money Advisor’s top 5 tips for educating young children about money
- Save money for a charity together
Saving money for a charity together with your children is a great way to teach them the value of money, responsibility and kindness.
Get your child involved at all stages, from choosing the charity,to planning and completing a bike ride or walk to raise the money, to counting the savings and eventually posting the money to the charity.
Encourage them to talk about their charity to their family and friends so it becomes a real source of pride.
- Teach patience through gardening
Being good at saving is about having a healthy respect for delayed gratification. This can be hard to teach children – the famous Stanford marshmallow experiment is testament to this.
An easy gardening project is an exciting, fun and messy way children can learn this, however. Growing chilli peppers or tomatoes will teach them how to nurture a plant over time, the value of patience and the visible reward at the end.
Paint a money box
Encourage your child to see saving as a fun, positive thing by allowing them to choose and decorate their own piggy bank. There are all sorts of designs available these days, from rainbows to treasure chests and dinosaurs from around £4 (so it’s good for your wallet too).
Giving their own piggy bank pride of place in the house will help re-enforce its importance and should get them excited to fill it up.
- Set a savings goal for the whole family
Whether it’s a holiday, a new TV or a special day out, if you’re saving for a treat that will benefit the whole family, get your kids involved too.
Using a big piece of paper, create your own totaliser and let the kids colour in the different stages of savings. This will help to give them an appreciation for working towards a goal over time and show them in a funway that some things have to be earned over time.
- Learn to say no
It’s every parent’s instinct to give their child everything they want. When they ask for the latest shoes, games or clothes that their friends have, it can be really difficult to say no without feeling guilty. But this can put yourself and your child at risk.
If you find yourself always giving in to your child’s demands, try to take a step back and see the bigger picture. Most of us don’t have a bottomless pot of money, so always giving in to your child could put you and your family at risk of debt, and doesn’t encourage the long-term saving habits that will really benefit them as an adult.
For tips on how to say no to a child, try reading ‘Saying No’ from psychotherapist, mother and author Asha Phillips.