Teaching your kids about money – the smart way – words Alexa Wang

Despite being added to England’s secondary school curriculum in 2014 and The Money Charity finding that 90% of schools were delivering this type of education in 2016, it’s not all positive.

A huge 66% of teachers surveyed branded the standard of financial education in schools as either somewhat or very ineffective. In fact, three out of five teachers said the curriculum change had no impact and worryingly, a third of teachers didn’t know financial education was on the curriculum.

The impact of a lack of financial education can be significant, with The Money Advice Service finding that children between the ages of 12 and 17 whose parents made their spending decisions for them were more likely to be poor at managing their money.

Of course, it’s not just teachers who are responsible for educating children. To help parents with teaching your kids about money, provider of pension transfers: True Potential Investor has shared the following advice to help point parents in the right direction.

Educate from a young age

Once they reach seven, your child will already know how they view and perceive money, The Money Advice Service has found. It’s important that you start teaching kids about money and what it means early.

Let your children count out your cash. Doing so can help them not only get used to handling and counting money, but also improve their numeracy skills.
Teach them about the exchange transaction by allowing them to hand over the cash.
Use play as an educational tool. Many children will like to play shop, which will again help them better understand money and value while still remaining fun.

Make the comparison

Wants and needs are two very different things — and your child may not be able to easily distinguish between the two nor fully understand the cost of what they’re asking for.

You shouldn’t feel guilty about saying no to your child when they ask you to buy them something. 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.
Draw a real-life comparison to illustrate the scale of the cost to older children. 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.

Working towards savings goals

Not only is it important to teach your children about spending, they must also understand the principles of saving. 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.

Spending, saving and donating are three core areas your child can divide their cash between. Giving them three jars or piggy banks is probably one of the easiest ways of doing so, so they can 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.

Skills students need

Financial responsibility steps up a notch as your children transition between school and college or university. As a parent, you’ll need to prepare them the best way you can:

Accept that they’ll make mistakes. As they get their first job 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.
Promote continued work. Earning on their own is one of the best ways to understand the value of money.
Set them up for life with the skills they need before they get to college or university. 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.

Take the above advice on board and instil financial education at every stage of your child’s life.

Teaching your kids about money – the smart way – words Alexa Wang