Financial education was introduced into England’s secondary school curriculum in 2014. While this represented a step in the right direction in improving financial education for children and school-leavers, it certainly hasn’t solved the problem.

Research carried out by The Money Charity in 2016 revealed that 90% of schools were delivering financial education. While uptake figures are pleasing, the quality of the education delivered tells a different story.

Rather worryingly, 66% of teachers who responded believed the financial education delivered was either somewhat or very ineffective. In fact, three out of five teachers said the curriculum change had no impact, while one in three didn’t know financial education was on the curriculum.

There are several factors which are responsible for this poor outlook on the UK’s financial education, ranging from its position within the wider curriculum, to a lack of in-depth training for teachers.

So, is the lack of financial education and responsibility having a major impact? Research from The Money Advice Service has found that 12-17-year-old children whose parents made their spending decisions for them were more likely to spend unnecessarily and have poorer money management skills.

It’s clear that young people require strong financial education as well as hands-on experience of managing their money, and this responsibility lies with both their parents and teachers. Eighty per cent of parents believe it is their responsibility to teach their children about finances — yet one in six don’t feel confident doing so.

To help, pensions specialist and investment expert, True Potential Investor, has provided a range of tips to help you teach your children about finances and how to be responsible with their money.

Start their financial education at a young age

The Money Advice Service identifies that your child’s attitude towards money can be determined by their seventh birthday. It’s important that you start talking to them about money and what it means early.

– Ask your child to help you count your cash to pay for something. Doing so can help them not only get used to handling and counting money, but also improve their numeracy skills.

– Allow your child to pay the cashier to educate them about the exchange transaction.

– Teach them through play. Many children will like to play shop, which will again help them better understand money and value while still remaining fun.

Underline the difference between essential and non-essential spending
Of course, there is a difference between what your child would like and what is a necessity. In many cases, children simply don’t understand the cost of what they are asking for.

– If your child asks you for a new toy or item of outfit, don’t be afraid to say no. Encouraging your child to save up for something they want rather than you buying it for them will help your child understand the value of money and delayed gratification.

– Explain the cost of what they’re asking for in real-life terms if they’re older. For example, is a £300 games console enough to cover the family’s monthly food shop? This perspective can help children realise the difference between what they want and what they need, and realise that they can’t always have everything.

Help them to set goals and work towards them
As stated above, it’s possible to influence your child’s attitude to saving as well as spending. If they start saving towards a games console or other item, encourage them to budget with the money they have. This is applicable whatever the age of your child, whether they’re dealing with pocket money or wages from their first job.

– Encourage your child to split their money between spending, saving and donating. By giving them three jars or piggy banks, they will be able to see a clear divide in their money. For older children, this can be done through having a separate current account to their savings account, while you may want to give younger children their pocket money in lower denominations so it can be easily split.

Teach teenagers what they’ll need in future

The transition between attending school and becoming more financially responsibly as they move onto college and university can be difficult for teens. As a parent, you’ll need to prepare them the best way you can:

– Take a step back and allow them to make their own mistakes. As they join the working world and start earning money for themselves, they may be tempted to splurge with their first wage, leaving them short for the rest of the week or month. You can disagree with their purchases, but try not to be too controlling over how they spend their cash. Eventually, when they’re tired of being skint for the majority of the month, they’ll realise the importance of budgeting and will consider a purchase more before buying it.

– Earning on their own is one of the best ways to understand the value of money, so encourage your child to keep working.

– If your child is leaving to attend university, make sure they are aware how to remain financially responsible. When the student budget is limited, it’s very easy to turn to credit cards with a high APR. Make sure they understand the options available to them as a student and encourage them to choose the best ones.

By making sure your child is aware of financial responsibility from a young age, it will be easier to prepare them for managing their money in later life.

Of course, leading by example is one of the best ways of doing this. True Potential Investor’s parent company, True Potential LLP, has partnered with the Open University to establish the True Potential Centre for the Public Understanding of Finance, establishing three free personal finance courses to help improve financial confidence across the UK. More information can be found here.

Sources
http://themoneycharity.org.uk/financial_education_schools/

https://www.moneyadviceservice.org.uk/blog/young-people-and-money-having-the-conversation

 https://www.theguardian.com/money/2014/nov/10/tips-teach-child-money-matters

https://www.theguardian.com/lifeandstyle/2017/mar/18/how-to-teach-your-kids-about-money