Financial literacy is an important skill children need to learn, but what's the best way to teach them?
When it comes to handling money, starting young can really pay dividends. But even though financial education in schools has been on the National Curriculum for six years, figures show that money lessons are still not getting the emphasis they deserve.
Fewer than two thirds of secondary-aged children have ever had any access to formal financial education, according to a recent study, while three quarters of children get most of their money knowledge from their parents.
With the onus on the Bank of Mum and Dad to teach their children about money, here is how you can raise young people to be financially literate.
Start them young
“Money confidence is a vital life skill,” says Catherine Winter, Managing Director of financial education at the London Institute of Banking and Finance.
“Young people say they want to learn the practical skills that will help them prosper in life; to understand the financial products they’re likely to use, such as mortgages, loans, and credit cards; and to be able to budget and understand their tax.”
Studies show that children who learn about money at a young age are more likely to manage it well when they are older. According to the University of Cambridge, which pulled together findings from 100 different pieces of research on the topic, some money habits are set by the age of seven, and parents have real power to foster money skills at home.
Make it practical
Money can be a very abstract concept for children, particularly now that so much is on cards or spent online. But younger children will learn better using actual cash, says Salman Haqqi, personal finance expert from money.co.uk.
“A good place to start is getting children comfortable handling cash and coins. Explain to them how money is used to buy things and that it must be earned before it can be spent,” he says. Games with cash can also help, he adds.
“Creating easy monetary games such as counting pennies can help your child understand the value of different denominations of money. Try using a pile of 1p coins and asking your child to match the number of coins to the price of a higher value coin, such as 10p or 50p.”