Youngsters reap rewards from learning how to handle money

TALKING to children about money and giving them experience of making money decisions could be just as important as saving for their future, according to new research from the Money Advice Service.

And the report show a worrying lack of money skills among children and young people in Wales.

But it found that children whose parents involved them in decisions and discussions about money, and allowed them to experience using money from as young as four, are more likely to develop vital financial skills.

These skills can have a major positive impact on their ability to save, budget and plan ahead financially in later life.

However, children who aren’t included in these discussions, or don’t get experience of using money, risk being left behind.

While the research highlights the importance of managing money during childhood, early findings indicate that many 16 to 17-year-olds are ill-prepared for dealing with adult financial responsibilities.

Some 28% of those with a bank account say they haven’t had experience of putting money into one, with 28% not even having a bank account and just over half not knowing how to read a pay slip properly.

Half of parents in Wales think that habits become established at age 12 or later. This is in contrast to previous Money Advice Service research which showed that by the age of seven, children are able to self- regulate their behaviour, and by the time they are eight, they have a good enough concept of the future to begin to build a savings habit.

When it comes to saving money, only 12% of eight to 17-year-olds save money every time they get money, while 31% save most times they get money. Moreover, 50% save sometimes and 7% never save at all.

The report shows that there is still an opportunity to increase levels of financial education in the classroom. Currently only 35% of children surveyed in Wales aged seven to 17 say they have learnt about money management at school and 7% have talked to their teachers about money.

Positively, nine out of 10 young people who had learnt about money management at school said they had found it useful.

And three in four children talk to their parents about money, with seven out of 10 parents believing that they are a good financial role model for their children.

Lee Phillips, Wales manager for the Money Advice Service, said: “There are many ways that parents can start to encourage their children to interact with money from a young age.

“We know that children learn best when they gain practical experience with money, and allowing them to make decisions and learn from their mistakes lays the foundations for better money management skills as they grow up.”

Money Advice Service’s report has been launched in partnership with Principality Building Society, which is teaching more than 40 classes in 29 schools in Wales to provide financial education lessons to more than 1,000 children.

Its chief customer officer, JulieAnn Haines, said: “Principality is committed to helping improve the financial skills of young people and this year has been a remarkable one, with more colleagues than ever getting involved, demonstrating all the values which the society stands for.

“In the past year more than 3,000 schoolchildren have benefited from financial education classes Principality colleagues have participated in.

“Our schools do a great job of educating our young people and to prepare them for life, but it is also vital that private sector organisations with expertise provide additional support and help the communities they serve.”