What your little treasure needs to know about finance
PARENTAL lack of confidence – combined with a lack of personal finance teaching in school – risks a generation of children growing up without any understanding of money matters.
More than half of parents do not have either the confidence or knowledge to teach their children how to handle money, while the subject is not a statutory part of the school curriculum.
James Jones, of credit reference agency Experian, says: ‘We know children’s money habits are set from as early as age seven. Many are missing out on money lessons at school, making it even more important to start the conversation at home.’
Three in five parents are concerned their children will be unable to successfully manage their finances in the future. Nearly a third are more worried about educating their children about money than talking about the birds and the bees, while a quarter find it more daunting than teaching them how to cook.
While children in primary school are taught the value of different coins in mathematics, understanding how to budget or work out the interest rate on a loan is not in the curriculum.
Most experts believe money teaching through schools is the key to greater financial literacy.
Russell Winnard runs the LifeSavers financial education programme in schools in England. It’s managed by charity Personal Finance Education Group. He says trying to engage parents about cash is difficult.
‘Parents do not want to be seen walking across the playground to the financial skills class,’ he says. ‘But when we talk about money with children in schools, that benefits the whole family.’
Winnard, a former teacher, says that when he ran classroombased financial programmes parents often came in to say their children’s financial literacy had improved the whole family’s cashflow. He adds: ‘They would say things like, “I did not realise we were on an expensive standard variable rate mortgage until my daughter told us.”’
LifeSavers is backed by the Church of England and Archbishop of Canterbury Justin Welby, who helped to set up the charity after condemning payday lenders in 2013 for high lending charges. He vowed to put Wonga and its rivals out of business using a mix of education and support for small lenders such as credit unions which levy lower interest rates.
Doctor Arinola Araba, who created a game called bMoneywize designed to teach children about managing finances, believes both home and school have a role to play. He says: ‘They need to work together. But it is good to begin at home. The problem is that parents often do not feel equipped to teach their children about money.’
There are resources available online for those parents who do not feel they know how to help their children manage money. These include information from the Personal Finance Education Group and an app from NatWest called Pigby’s Fair that helps children learn about saving through running a fairground.
A number of new cards such as goHenry, Quiddle and Osper allow children as young as six to learn about money. Parents can transfer money and set controls using apps that go with the cards. Providers claim that using these cards can help children save and spend responsibly. At 11, most banks allow children to have their own bank card.
Jones adds: ‘Money is an increasingly abstract concept for children. It is hard to understand where it comes from when you see your parents go into a supermarket, hand over a plastic card and sometimes come out with their shopping and cash. That is why it is important for parents to work with their children to help them understand where money comes from.’
Experian has launched a new scheme aimed at educating both parents and children about money. Called Values, Money And Me, it comprise a series of online games.
Tammy Rhomi, from Nottingham, has used Experian’s online tools to teach her children Kaycee-Lee, 12, and six-year-old Kain about money.
Stay-at-home mother Tammy, 32, who is married to Andrew, a painter and decorator, says: ‘Kaycee-Lee has autism and struggles with understanding money. So she has been helped by the tool as indeed I have.’
The financial information focuses on energy saving, shopping around for the best energy and utility deals and not borrowing money if you cannot afford to pay it back.