Back in 2014, David Cameron’s coalition government mandated personal finance lessons in secondary schools, highlighting the challenges facing youngsters and so-called “generation debt” in the future.
However, schools are apparently failing to heed this mandate, claiming that the government has consistently failed to equip teachers with the requisite knowledge or tools to impart personal finance lessons.
So, the onus may well be on parents to teach their kids about money. But how can they go about this particular endeavour?
What Should You Teach Kids About Money?
Ultimately, you can start to teach kids rudimentary money lessons from the age of three and upwards, or from the moment that they become more aware of the world around them and start to communicate ideas.
As children reach school age (around five or six), they start to develop a far deeper understanding of numbers and should be able to pay attention for longer. At this stage, you can begin to demonstrate simple money management measures and positive financial behaviours, while ensuring that things are kept fun at this stage.
As children grow older, they begin to distinguish between wants and needs, which in turn creates the opportunity to discuss savings and the need to spend responsibly.
In the case of teenagers, financial education can be ramped up to explain more complex concepts such as interest rates, as they begin to comprehend the external factors that weigh heavily on debt and financing options.
Affording Children Real-Life Learning Examples
At this time, it’s possible to utilise practical tools and examples to help kids learn about money and personal finance, from handling cash and debit cards for the first time to increasing their underlying mathematical ability.
The key, where possible, is to keep these learning activities fun, without losing sight of their practical focus on importance in the real world.
One excellent example is to give your teenage children a prepaid debit card, which parents can load with a predetermined amount of money and encourage their children to manage this within a specified time period.
This can be during a trip to the local store or over the course of a week or month, with a view to teaching precise and real-time budgeting skills and imparting the value of prioritising purchases.
Interestingly, we’ve also seen video games evolve to feature real money purchase options and various corporeal elements, with some of these titles decidedly educational in their nature.
For example, Nintendo has a game called “Build a Bear”, where you have to buy clothing and make food while managing a fixed sum of money.
This can teach simple but very important lessons in a fun and interactive environment, while studies seem to suggest that so-called “gamification” and simulation helps to stimulate higher levels of information retention over time.