Research published in 2020 found that the UK has the third highest level of household debt in Europe and the eight highest globally. There is a plethora of reasons for this, but the one that supersedes all others is a lack of education. Specifically, teaching children about money.
This is precisely what we were asked to provide insight and comment on in an article for the Daily Mirror’s Your Money column. Mazuma’s Lucy Cohen told the paper:
“As well as lessons on saving, teach your children the danger of debt.
“Go into the nitty gritty of the consequences of buying things you cannot afford and becoming reliant on credit.”
So, why is this important?
Simply put, children’s attitudes and habits towards money begin to develop at five years old. By the time they reach the age of seven years, their views about money and how to use it have already been shaped, according to the Money Advice Service.
It therefore follows that by educating children at infant level and embedding lessons on finance in the school curriculum is essential until the age that young people start to make key financial decisions such as buying a car, saving for a rent deposit, or financing their way through college or university.
But, as according to The Mirror’s columnist Harvey Jones, this simply is not happening. He said: “Almost nine out of 10 young people aged between 16 and 24 say school did not teach them financial lessons.”
Jones’ conclusion echoes our own sentiment in that it really is not too early to teach children about money. It is not about wagging your finger and issuing a set of dos and don’ts, which will likely have the opposite effect. Indeed, most parents will say that if you instruct a child not to eat too many sweets before dinner the chances are they will go ahead and eat them.
The article in The Mirror gives some great tips on how parents can better educate and inform children on how to respect money, so that they can take these lessons with them into adulthood and make better informed financial decisions. They include:
- Lead by example.
- Teach them the value of money.
- Get the saving as early as possible.
- Give them the opportunity to earn their keep.
- Put them in charge of their own finances and teach them to be responsible.
There are many more we would add to the above list, such as budgeting, setting savings goals, defining the difference between needs and wants, and crucially allow them to make money mistakes.
What suggestions would you include? Let us know, we would love to hear your thoughts.