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.
Why it is important to teach your kids the value of money
Teaching your children the value of money early on in life may seem daunting, but it can be done in different phases so they learn the basics and their knowledge grows as they grow. This will help to secure the foundation of financial responsibility that will serve them well throughout their life. It will also help to understand the value of the gifts they are given, and what it takes to live and survive in this climate. When children understand the basics of budgeting, saving, and spending money, it not only shapes their decisions as they get older, but also influences the habits that they create for themselves. As they grow into young adults, these skills become essential for managing personal finances, from paying bills to supporting their goals in the future.
The importance doesn’t just stop there. There may come a time when they find themselves managing more complex financial matters, such as making decisions about family wealth or overseeing your estate planning in the far future. Not only do they need to know what to do, but also where to go in times of need. When it comes to estate planning, you want to teach your children when they are older about the value of assets, and the support a good Estate Planning Attorney can do for them. By fostering a healthy relationship with money from a young age, you are not just preparing them to live independently; you are also empowering them to handle greater financial responsibilities with confidence when the time comes.
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.
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