How are we educating our children about money?
Martin Lewis recently claimed that as a nation we have “educated our youth into debt but never about debt” – we have had a huge swing from our Grandparents’ mantra of “neither a lender nor a borrower be” to a debt fuelled, plastic-binging generation who are still pretty debt illiterate. Neither is ideal, so what are we doing to ensure that our children can possibly make a better hash of it in the future?
From September next year, personal finance education will become a compulsory part of the school curriculum from primary school onwards. Not a moment too soon, frankly, but there’s more to it all than some teaching in school. What messages are our children receiving from us at home?
My 10 year old bought himself a bike this summer. His old one was way too small for him but as he had already had a reasonably expensive birthday present we told him we simply couldn’t afford to buy him a bike this year. However, he has some savings and he had the option of using some of his own money to buy the bike. He thought about it for a while and decided it was worth it (having also ascertained that there was NO WAY the rest of the money was going to be released to buy Xbox games!).
This followed hot on the heels of our summer holiday with friends where we had sat all the kids down earlier in the year and explained that their spending money had to be provided by them. They could save birthday money or they could earn it by doing extra chores, but it wasn’t going to be provided by us.
This was a great experience for Joe. He cheated a bit because he simply saved his Christmas money and didn’t really make any effort to earn any more, but as money usually burns a hole in his pocket then I suspect he saw it as a huge sacrifice. The concept of delayed gratification doesn’t sit too comfortably with my son, but he certainly enjoyed his Parisian spending spree in the toy department of Galeries Lafayette as a result!
I believe it’s never too soon for children to start handling their own money.
So how far do you go with the financial education for your children? It seems that there are huge discrepancies in the way that we teach our kids to handle money and I’d love to hear others opinions. I recently had the Mobile Phone conversation with Joe again. He knows I’m immovable on the “Over my dead body until you go to secondary school” rule but the addition of “And you’re going to need to come up with a plan for how you’ll pay the bill” to the discussion left him giving me the slitty eyed look and harrumphing under his hood.
One day he’ll thank me. That’s what I keep telling myself, anyway!
About Special GuestBirds on the Blog welcomes Guest Bloggers of all abilities, if you have something to say and you wish to share it with us - get in touch
View all posts by Special Guest →
9 Responses to How are we educating our children about money?
All that jazz – All in A Day
Review of: Cousin Alice Jazz Music by Cousin Alice: Elaine Sturgess Reviewed by: Elaine Sturgess Rating: 5 On January 21, 2012 Last modified: January 30, 2012 Summary: What makes Alice so distinctive is her wonderfully smokey voice, a quality that furniture designer William Yeoward found so arresting at a concert she was performing for the [...]
There is an old book by Bob Beckman, written in the 1980s, that was considered ‘tosh’ by ‘experts’ when published. This was rather foolish because Beckman showed with convincing examples that the first half of any century is beset by slumps and depression, and the second half by spending and inflation.
Beckman argued therefore that we need different rules of behaviour in order to thrive depending upon which half of a century we are living through.
Since the recent crisis thrift, as was the case in the great slump of the 1920s, has become fashionable.
Trend expert John Gerzema, in a not to be missed TED talk, talks about a number of shifts in consumer behaviour since the crash. For example people in the US tend to be more neighbourly. They shop locally, and seek out locally grown produce. They are starting once more to save, even though they have less disposable income. In short they are developing the habits beloved by those living in the first decades of a century.
Children are highly adaptable. They easily follow trends and fashion. If simple pleasures and thrift are fashionable children will adopt those habits, at least for a while until they are in their fifties and relatively affluent.
Unfortunately the same can’t be said of adults, and it is adults, I fear, who will feel the pain of this shift in behaviour. People seem to think they have a right to travel by car, rather than share a bus-ride or railway carriage. Public transport has become unfashionable, and for this reason it largely doesn’t work in the U.K., whereas in a so called developing country such as Turkey, where I live, it works rather well.
I fear more pain will need to be felt before people come to their senses and appreciate that if they managed on half of the luxuries they have come to expect as a right they would still be considerably better of than their great grandparents of 100, or so, years ago.
Don’t worry about educating children. Just set a prudent example.
That’s my take,
Stephen
Twitter: stephen_bray
That books looks interesting. I’m not sure I entirely agree with you about public transport. Public transport in London, where I live is pretty effective because it transports millions of people in and out of the capital every day. But what I would say it that the economic model means that is cheaper to travel by car than by train, and sometimes by bus, so I think people are often making understandable economic choices when they chose to travel by car. I choose to travel across London to see my brother by car because it is cheaper than paying the train fare.
You’re so right about the need to educate our kids about money and its management, Kate. Thanks so much for sharing this: I know many, many parents will find it incredibly useful.
Twitter: SuzeStMWrites
As a parent I found your thoughts very useful Kate, thanks.
This summer holiday, I have made my eldest daughter work for her going out money. It’s caused a few rows over lateness, what is ‘overtime’ and what her ‘job’ entails, but she is very wise to spending what she has had to work for. I have to say it’s one of my better parenting decisions
Every family will have it’s own ways of approaching this tricky topic. We have split our kids phone bills 50/50 – expecting them to pay for their “wot u doin?” ” nuffink” type text conversations, whilst I fund the “I expect you to let me know where you are and why you’re going to be late” type communications.
With regard to saving – my 15yr old has just bought a bike using money earned solely from a fortnightly magazine delivery job. I am blessed that he is a saver, but the impact it has had on his 2 younger siblings has been quite noticeable. No.2 son can’t wait to get himself a job in order to enjoy similar rewards…
Every family is different, but not a lot should come on a plate.
To solve that problem, I decided to use my 2 decades of teaching finance experience to use and I wrote the 20 volume series “Finance for Kidz.” Details of these books are at http://www.finance4kidz.com
If there is a specific question that you would like to ask, I can try to answer.
Thanks
Prakash Dheeriya, PhD
Father, Author & Professor of Finance
Finance for Kidz Series
finance4kidz dot com
I am constantly trying to work out some kind of sensible pocket money plan for my kids, which they can augment with additional chores during the holidays, if they wish. Sadly, however, we have never yet come to anything that works. It is difficult to judge how much to pay them – if they are to be able to buy magazines and sweets from their own money, they will need to earn about £5 each a week. If, however, I buy those items for them, on an ad hoc basis, the weekly pocket money threshold could be set at a more reasonable £1/£1.50, for them to spend or save as they wish.
In any event, we need to decide on a system and then actually implement it, not simply keep everything as notional in our heads.
When I was a child, Mum and Dad had a very simple pocket money system. It was 20p plus twice your age until you were 16, when it became 20p plus three times yours age.
I find the same thing to be honest – I think the getting the balance right is a work in progress!
When I was a child I didn’t get any pocket money – a very effective form of control really. It took me years as an adult to really get to grips with money management and I think no money is as bad as too much.
Totally agree with that approach – although when the time comes I’m not sure how the mobile bill will work.We’ll see!