Research shows that money habits are set by the time children are just nine years old, and while this might seem a little too early to start having conversations about finance, it’s becoming increasingly important that we do.
A recent study from the Money and Pensions Service found that only 48% of children in the UK receive a meaningful financial education. So, whether at school or at home, it’s clear that more needs to be done to ensure children learn how to manage their money in preparation for adulthood.
While as parents or carers, you have a primary role during your child’s formative years, is there more to it than using the likes of pocket money as a way of introducing financial education? And what part can schools play?
The school holidays are coming up and with that in mind, the latest episode of The Pension Confident Podcast delves into the topic of kids and money.
Available to listen to now, it features me, Laura Miller, as host, and guests Emma Maslin, a certified Money Coach and Founder of The Money Whisperer, an award-winning website that attempts to equip its readers with the right money mindset, and Will Carmichael, Co-Founder and Chief Executive Officer of NatWest Rooster Money, which uses digital tech to empower kids with an understanding of money.
For Money Coach Emma, while ‘education settings have a role to play in financial education’, parents should definitely get involved too.
Emma Maslin, certified Money Coach and Founder of The Money Whisperer says: “We live in a society where we’re encouraged to consume and not leave our money in the bank. But we should be encouraging children to leave money in the bank.”.
Why should I teach my children about money?
Learning about money from a young age gives children the skills and confidence to make good financial decisions in adulthood. Speaking about the issue on the podcast, Emma said: ‘If we can teach children the basic building blocks of good money habits and money management, we’re enabling that financial resilience in them as adults.’
It’s an issue the Centre for Financial Capability has agreed on. Jane Goodland, Trustee of the Centre, said: ‘Without a high-quality and effective financial education, young people lack financial capability and a thorough understanding of money skills, and are at risk of facing financial difficulties in later life.’
Recent research by charity MyBnk and the Centre for Financial Capability surveyed over 4,000 children from over 50 schools and found that children with low financial understanding scores tend to come from lower-income areas.
- 76% of schools with children most in need of financial education were in more deprived areas
- 67% of schools with children most in need of financial education had above the national average of pupils on free school meals
All children benefit from financial education, but children from lower-income families more than most – their financial knowledge, skills and savings rose by 56% compared to an average of 7% nationwide.
Money Coach Emma made the link between learning about money when young and avoiding financial mistakes as adults.
She said: ‘Children get taught the basics at school and then at 18 they’re faced with letters from the bank offering credit cards, with no teaching around what it actually means for them to take on that credit card, and what the potential life implications are if they get it wrong.’
When should I teach my children about money?
On when to begin money education with kids, Natwest Rooster Money’s Will believes that talking about money’s “the biggest lesson of all”.
Will Carmichael, Co-founder and Chief Executive Officer of Natwest Rooster Money says: “A lot of people’s first conversations about money are negative ones. So, starting early and talking about it with your kids is the best start.”.