There was a spotlight on financial education for UK children in 2014, as it was finally added to England’s secondary school curriculum. Yet the problem was far from solved—as online investment company, True Potential Investor explores:
A total of 90% of schools were delivering financial education by 2016, as found by The Money Charity. While uptake figures are pleasing, the quality of the education delivered tells a different story.
A survey of teachers was carried out regarding financial education. 66% of teachers said money education in schools was either somewhat or very ineffective. In fact, three out of five teachers said the curriculum change had no impact and worryingly, a third of teachers didn’t know financial education was on the curriculum.
Responses identified that a mixture of factors were attributed to the less than ideal delivery of financial education, from its position within the wider curriculum to a lack of training for teachers.
Research from The Money Advice Service has found that children aged 12 to 17 whose parents made their spending decisions for them were more likely to spend unnecessarily and have poorer money management skills.
There is clearly a need for teachers and parents to deliver financial education to children, yet one in six parents don’t feel confident doing so. The following tips and advice are provided to help parents educate their children at each stage of their life.
Your child’s financial attitude is determined early on
Your child’s financial attitude will already be determined by aged seven years old, according to the money advice service. It’s important that you start talking to them about money and what it means early.
- Encourage your child to them help you count out the cash you need to buy something. Doing so can help them not only get used to handling and counting money, but also improve their numeracy skills.
- Provide your child the opportunity to hand money to the cashier as that will educate them about the exchange transaction.
- Teach them about money whilst incorporating the enjoyment of role play style activities. Many children will like to play shop, which will again help them better understand money and value while still remaining fun.
The value of saying no sometimes
Help children understand the value of what they’re asking for — and there are some tactics you can use to make this clear to them.
- Rather than giving in and buying them everything they want, remember the value of saying no sometimes. Encouraging your child to save up for something they want rather than you buying it for them will help your child understand the value of money and delayed gratification.
- Help older children evaluate what they’re asking for into real-life terms. For example, is a £300 games console enough to cover the family’s monthly food shop? This perspective can help children realise the difference between what they want and what they need, and realise that they can’t always have everything.
Inspire positive spending and savings habits
As well as inspiring and positively impacting their spending attitudes, aim to influence your child’s attitude to saving. If they start saving towards a games console or other item, encourage them to budget with the money they have. This is applicable whatever the age of your child, whether they’re dealing with pocket money or wages from their first job.
- It can be beneficial to encourage them to consider separating their money into categories such as: spending, saving and donating. Giving them three jars or piggy banks is probably one of the easiest ways of doing so, so they can see a clear divide in their money. For older children, this can be done through having a separate current account to their savings account, while you may want to give younger children their pocket money in lower denominations so it can be easily split.
Preparing your child for life
Becoming more financial responsible becomes even more important as your child moves onto college and university. As a parent, you’ll need to prepare them the best way you can:
- Help them understand their mistakes. As they get their first job and start earning money for themselves, they may be tempted to splurge with their first wage, leaving them short for the rest of the week or month. You can disagree with their purchases, but try not to be too controlling over how they spend their cash. Eventually, when they’re tired of being skint for the majority of the month, they’ll realise the importance of budgeting and will consider a purchase more before buying it.
- Emphasis on a positive attitude to work is crucial. Earning on their own is one of the best ways to understand the value of money.
- Prepare them with the knowledge they need to be financially responsible as they leave home and progress to university. When the student budget is limited, it’s very easy to turn to credit cards with a high APR. Make sure they understand the options available to them as a student and encourage them to choose the best ones.
Educating your children about money is key to help preparing your child for later life. To help you lead by example, the parent company of personal pension provider True Potential Investor, True Potential LLP, has partnered with the Open University to establish the True Potential Centre for the Public Understanding of Finance. They have established three free personal finance courses to help improve financial confidence across the UK.