Financial literacy is a gift that lasts a lifetime.
Our current economic circumstances are full of teachable moments we can and should share with our children. After all, they’re probably not learning these topics in school. Only four in 10 children and young people say they have had some financial education at school, according to the website Financial Capability.
That’s why we’re equipping you with money tips and topics to discuss with the children in your life, plus independent study materials (ahem, videos and games) that will hold kids’ attention while teaching them money management. Keep reading to get to the head of the class.
Being in charge of the budget
Are your children constantly asking you for money? One father found a way to nip that in the bud: he had his teen and preteen sign a contract stating what expenses he would pay for, then gave them a set amount of money to spend each month for clothing, phone bill and extras. “My son’s hard lesson came when his friend pushed him into a pool along with his phone. He learned why it’s important to build a reserve for unexpected expenses,” the father said. Giving your kids a set amount allows them the chance to make financial decisions – and experience the consequences first-hand.
The economics of higher ed
We’ve all asked a kid, “What do you want to be when you grow up?”. Instead ask what their interests are and help them explore how they might be applied in a future career. This teaches them adaptability, something of value in a changing economic landscape.
As they get closer to making a decision about whether to attend university or doing an apprenticeship, help them think through the costs and benefits. And if you have a child already attending university, know that timing is everything. Yale researchers have found that graduating from university in a bad economy has a lasting negative impact on wages – and many students are considering gap years and postgraduate degrees because of this.
The roots of retirement
Raise your hand if you want to raise a child who will hit the ground running when it comes to saving for retirement. Personal finance experts say we should let our children know that retirement is the biggest expense they’ll ever save for, and it’s important to start early. To help them understand the value of compounding, help them open a savings account where they can experience the power of this phenomenon for themselves.
Extra credit knowledge
When you’re young and don’t have much money, it’s easy to rely too much on credit and jeopardise your financial future. Help your child understand the importance of a good credit score and explain how you keep yours up. Share stories about how you financed your first car or house and explain in concrete terms how the interest rate affected the overall purchase price.
Home school resources
Children and young people aged 5-18 can use NatWest’s MoneySense, which is a free financial website with activities, games, and resources around money.
Money Heroes is a free financial education programme for children aged 3-11 which provides activities and games you can do with your child as well as e-books to read.
Search https://www.valuesmoneyandme.co.uk/ for a virtual world set up to help children explore money matters.
In giving your child the gift of financial literacy, you’re helping set them up for a brighter future. Through a purposeful approach, we can all do our part to raise the next generation of resourceful citizens.
Have family or friends share stories of how they thrived during a recession or found creative ways to stretch a budget.
Introduce your family members – even the younger ones – to your wealth manager, who can act as a teacher’s aide for financial literacy.