TV psychologist reveals how to educate your children about money
On the whole, financial education across the UK is inadequate and doesn’t prepare children for the basic requirements of modern life and this is largely because it remains a taboo topic of conversation at home. Unless we properly educate children about money, then how can we expect them to grow into financially responsible adults?
Basic financial education needs to start as soon as they are ready to engage with more formal learning, when they start to develop numeracy and literacy skills, at around age seven. Recent research conducted by Orbis Access found that children of this age have a keen awareness of money and whether parents like it or not, it’s a subject about which we need to engage with them.
Children look up to their parents who can lead by example and give day-to-day lessons on money when out at the shops or planning a family day out. This real-life financial education cannot be replicated by the school system and is the best way for children to form good, long-lasting financial habits.
Here are five practical tips and fun and informative examples for parents wanting to teach their children about money:
1) Get physical: Learning about actual money, the coins and banknotes. Most parents think that this is all that goes into learning about money, but it’s not the only lesson. For example, give them the task of buying lunch with a small budget. This is great for teaching budgeting, decision making and prioritising.
2) Be practical: How to use money and its value in the real world. Encourage your child to keep a “savings wish list.” Ask them to write a small list of items that they want. Get them to work out how long they would need to save up in order to buy it, and how they think they may earn the money to buy it. This is a great opportunity to teach children about the concept of earning money, whether it is through helping with household chores or as a financial reward for educational success.
3) Three things: The things you can do with money: earn it, save it, spend it. Children need to learn all three of these skills because they are going to need them all in adulthood. Parents should explain how they are earning money; what then happens to it and provide safe opportunities for children to transact. Showing children how cash machines work and explaining that the money which is ejected has come from an account. You could also give them a budget and ask if it will be enough to buy the ingredients for a family dinner.
4) Don’t be afraid: Money can sometimes be a ‘scary’ subject to talk to your children about, but if you avoid it they will have the same psychological relationship with it. Sit down with them and ask them if they have any questions, you may be surprised at how much they understand.
5) Be open: Allow your child to see you dealing with money, making sure that they pick up good habits from a young age
Dr. Elizabeth Kilbey is a consultant clinical psychologist in the NHS and featured in the Channel 4 series “The Secret Life of 4, 5 and 6 Year Olds”.