Children can pick up all kinds of habits and traits from their parents, and in a world where financial education is increasingly important, teaching your children about money from an early age can really benefit them later in life.
In 2008 Ofsted found that students in schools "that were successfully developing personal finance education showed a good understanding of personal finance, were able to use financial terms correctly and were able to apply their knowledge to making financial decisions." The benefits can be seen in later life, with a 2010 study finding that "adults who received financial education in school are more likely to save and plan for retirement and to accumulate greater wealth."
The government has recognised the importance of financial education, and it will be introduced to the national curriculum September this year for children at key stage 3 or above (11+). Tracey Bleakley, chief executive of the Personal Finance Education Group (pfeg) said:
“We need to break the British taboo and get children talking about money. Managing money is an absolutely crucial area that every young person needs to learn – but as any teacher will tell you, to get learning you need to start talking. Classroom discussions are a great way to explore how to manage money, be a savvy consumer, handle risk and emotions and relate financial decisions to the rest of your life.”
Education starts at home: here, we take you through a few of the things that you might like to try to help introduce your kids to the concept of money, it's value and a few basic products early on.
At this age, children may have no real concept of money or buying things but your child is likely to be learning a lot through play. You may want to try introducing play money at an appropriate age to their toy collection (you can buy child-friendly plastic coins from toy shops) and showing them how to play “shop”. The books you read to them can also help; there are plenty of books for young children with a story along the lines of ‘mummy and baby go to the shops’.
According to a recent report by Aviva 73% of parents give their children pocket money, if you're one of them, you may be considering it from 5+. Handling real money can be a good way for children to learn its value and it may help them to start taking notice of how much the things they want actually cost. You can read more about pocket money and the different styles of giving here.
Talking about money and introducing planning
Talking about money can be helpful from an early stage too, whether or not you decide to give your childen pocket money. You may also want to consider taking your children through the basics of your family budget or let them help out with the weekly shop. Why not take a shopping list, a budget and a calculator to your local supermarket together - you could even leave a small amount aside for a special treat as a reward for sticking to budget!
If your child recieves small gifts of money on their birthday or at Christmas why not encourage them to think about saving up for a larger present that they have their eye on rather than spend it all at once? Children can be suprisingly keen to work towards a goal, and doing so can be an important long term planning lesson!
Opening a current or savings account
Do you remember your first savings account? Did it make you feel grown up? When you feel that your child is ready for it, you may want to help them to open up a current account or savings account in their name or on their behalf. A child can have a current or savings account in their name from aged seven in the UK, but you can open a savings account on their behalf before this. A simple understanding of basic financial products such as child savings accounts can help to lay a foundation for how more advanced products work later on.
Encourage or help your child to watch or plot the balance on a savings account grow from month to month as interest is added. Can you get a better rate elsewhere? What's the total amount that you can expect in the account at the end of the year?
As your child gets older they're likely to enjoy an increased amount of financial independence. Part time work when their old enough - and provided you think they can manage it alongside studies - or perhaps even carrying out odd jobs for you or neighbors for a small reward can help to foster an understanding of managing their own money and the concept of an earned financial reward. Now can also be a good time to start teaching your child how to cook healthy meals on a budget.
When your child eventually flies the nest for university or a place of their own, remind them that the money management lessons you taught them as a child still apply!
Tools & apps
With the introduction of money management to the national curriculum there's also likely to be a wealth of games and apps that could help enhance the lessons that you offer your child, you may even want to introduce them to the graphs and some of the more simple projections offered in the YourWealth Money Hub tool. Studies have shown that children can pick up the money habits of their parents from as early as the age of seven - getting your own finances in order could help your children in later life, so why not try Money Hub today?
What are your tips on helping children learn about money? Do you agree that money management should be a part of the national curriculum? Tweet us and let us know!