Financial education is quite stark in the UK. A lot of vital financial life skills are not taught in schools and many of us have to rely on parental or guardian influences, and if they have not had the best financial experience, then you are alone and having to wing it.
We want to change this and highlight the importance of financial education. The best thing that we can do for our children is to talk about money from an early age which will equip them with valuable life skills and set the foundation for a good financial well-being.
The journey towards financial literacy should begin early in a child’s life. As soon as they can count, introduce them to the concept of money. Let them handle coins and notes to develop a basic understanding of currency. Role play shops with them. This early exposure helps demystify money and builds their interest in the subject.
Adapt your conversations about money to your child’s age and understanding. Young children may start with simple lessons like saving coins in a piggy bank, while teenagers can delve into more complex topics like budgeting and investing. This progressive approach ensures that children can grasp financial concepts at their own pace.
Honesty is key when talking to your children about money. Share age-appropriate information about your family’s financial situation, including income, expenses, and savings goals. Use these discussions to explain the value of money and the importance of responsible financial decision-making.
Children often learn by observing their parents’ behaviour. Be a positive role model when it comes to money management. Show them how you budget, save, and make wise financial choices. When children see these practices in action, they are more likely to adopt them in their own lives.
Budgeting is a fundamental skill for financial well-being. Start by helping your children create a simple budget for their allowance or any money they receive. Encourage them to allocate funds for saving, spending, and giving. As they grow older, involve them in family budget discussions to help them understand the broader financial picture.
Teach your children the importance of earning money through age-appropriate activities like jobs around the house or part-time jobs. Encourage them to save a portion of their earnings for future goals. This not only instils the value of hard work but also reinforces the concept of delayed gratification which is a really difficult thing for young children to grasp because ‘wanting’ is a big feeling for them!
Guide your children on responsible spending. Discuss needs versus wants, and help them distinguish between essential purchases and impulse buys. Encourage them to compare prices, look for discounts, and prioritise their spending based on their goals.
Introduce your children to the banking system early on. Open a savings account in their name and involve them in the process of depositing and withdrawing money. Teach them about interest and how it can help their savings grow over time. Research which of the banks have the best interest rates at the time and teach your older children the value of shopping around for the best deals.
As your children grow older and their understanding of money deepens, introduce them to the concept of investing. Explain the different investment options available in the UK, such as stocks, bonds, and ISAs (Individual Savings Accounts). Emphasise the importance of diversifying investments and the potential for long-term wealth accumulation.
Finally, let your children know that making financial mistakes is a part of the learning process. Encourage them to take responsibility for their decisions, learn from their errors, and adapt their financial strategies accordingly.
Teaching your children about money in the UK is an invaluable investment in their future. By starting early, being open and honest, and providing age-appropriate guidance, you can empower your children with the knowledge and skills they need to make informed financial decisions throughout their lives. Ultimately, fostering financial literacy is a gift that will serve them well in adulthood and help secure their financial well-being.