It was only at the beginning of this year that the UK Government announced that debt management and personal finance education were to become compulsory in British schools for children from 5 upwards. This was welcomes by everyone in the finance and debt industry who understand just how important this type of education will be in eradicating our excessive personal debt problems.
However, in one of the final moves they made while in power, the Labour Government rescinded this promise prior to the election in May 2010. They blamed the Conservatives for not being able to push this through, but whoever is at fault, the result is the same. We will continue year after year to send 16 – 18 year olds out of the education system and into (expensive) Higher Education or their first job in many cases financially illiterate.
We claim to teach our children in school, everything they need to know in order to successfully make their way in the world. We teach them to read, to write, about World Wars and science, about capital cities and literary heroes of the past. But we fail time and time again to teach this vital skill – managing money.
This leaves it the responsibility of parents to teach their children about money. But just where do you start? Every child will be different of course, but it is possible to teach children from being as young as four or five about money.
Start with an explanation about prices while walking around the supermarket. Children first need to understand that in order to have something, they must pay a certain amount of money for it. Start with the basics. Don’t expect very young children to be able to grasp the precise difference between prices but if they can understand that a toothbrush, for example, will cost less than a car, then this is already putting the idea into their head that different things have difference values and you can elaborate further as they get older.
Make It Practical
We all learn better by doing. When your child next wants some sweets or a small toy when you’re shopping, try actually giving them the money (or in the least telling them how much they have). Let them work out what they can and cannot afford with that.
If your child has their sights set on a big treat or a certain toy, why not encourage them to save for it? You could take this a step further by enabling them to earn pocket money for certain household chores. Draw up a chart detailing how much they need to save and how much they have saved already thus illustrating the process.
We’re often surprised by just how much children do pick up! Simple things like “playing shop,” at home actually teach vital lessons about money.
It seems almost laughable that we don’t teach money management in schools as a compulsory part of the National Curriculum. How can we possibly expect people to become financially literate when we don’t offer any formal education in schools about it? Instead, we send people out into a society where credit is all too simple to come by, to learn as they go along… Is it any wonder then that we have the personal debt levels we have?