Children learn maths from a young age, yet personal finance education only became part of the National Curriculum in 2014.
Many believe not teaching kids how to manage their money is a big part of the reason why millions of people end up in debt as adults.
According to the Money Advice Service, 8.2 million people were in debt last year. That’s a staggering 16.1 per cent of the UK population.
In some areas, nearly a quarter of the local population is overburdened with debt, with single parents and larger families more at risk.
If kids were given a more well-rounded personal finance education from a young age, many of these problems could have been avoided.
Financial Education for Kids
Baroness Tyler, a Lib Dem peer, strongly believe that financial education for secondary school-age kids is not enough. She believes children should be taught about money, budgets, credit cards, and tax from a young age.
“This is about preparing children for adult life, managing money, and learning how difficult life is if you haven’t got any,” she told a House of Commons Select Committee at the beginning of the year.
Of course, it is arguable whether very young kids can make head or tail of financial management, but the House of Commons select committee concluded that age-appropriate lessons that teach children the importance of money, is a good thing.
The Benefits of Money Management Skills
As any school-age child will tell you, it is hard to fathom the possible benefits of knowing how to solve complex equations or calculate the circumference of a circle. Much of what children are taught in class becomes redundant the moment they leave school for the last time. Unless they progress on to further education, the maths they learn at school is no longer needed.
Personal financial management skills, on the other hand, are always useful. Simple skills, such as being able to plan a budget, reconcile a bank account, and understanding the significance of the APR of personal loans all make the difference between someone who manages their money wisely and someone who ends up in debt. A thorough understanding of the concepts of money management will stand kids in good stead once they become adults.
Knowledge is Power.
A high school teacher in Manitoba, Canada, understands this all too well. Each year, he sets his graduation class a simple exercise. Each child is asked to estimate their income and expenses for the coming year, but they don’t see how well their budget balances until the end of the exercise.
In all cases, the kids consistently overestimate their income and drastically underestimate how much their spending habits influence the budget. Most of the kids were very unprepared for the realities of adulthood, such as needing money to pay the bills and rent.
Even in UK schools where financial education is a regular lesson in the classroom, along with English and Citizenship, many kids don’t see how it can possibly be relevant to them. At 13 or 14, most children don’t have part-time jobs, so they rely on cash from parents, usually in the form of pocket money.
The average 14-year-old gets £8.03 per week in pocket money, but most will probably spend all that and more on music downloads, computer games, and the latest handset. It’s not the amount of pocket money that is important; it’s what your child does to earn the money that counts.
By encouraging kids to recognise the power of money and how it can make life easier in so many ways, we can prevent the next generation of kids from falling into crippling debt by the time they are 30.