Youngsters in need of financial education
When we were kids there was no financial education at school. It was a case of ‘learn by your mistakes’, which was often giving into the temptation of readily available credit as soon as you hit 18, and then struggling to pay it back for the next 10 years!
At least financial education is part of the curriculum in UK schools these days! Phew!
But, a recent survey* has revealed that two-thirds of 16 - 17 year-olds were unable to read a payslip and a third have never put money into a bank account. Nearly a third were unaware what would happen if council tax was unpaid, while only 7% of seven to 17 year olds had spoken to their teacher about money!
How can you help your children and close this financial education gap?
We have put together some tips below:
- Show them your payslip - you may not be keen to show your kids how much you earn, as they may say something like “see you can afford to buy me those trainers!” But it is important that they understand things like National Insurance and being on the right tax code when they get their first job. Try this payslip quiz on the BBC Newsbeat website!
- Explain monthly budgeting - You could show them your bank statement, or you could show them a simple ‘incoming and outgoing’ example to explain how to make ends meet each month. Our budgeting tool is really handy for this. You can choose a salary and then build up outgoings and see how much you are left with. Give it a go!
- What happens if you don’t pay on time - Help your children understand which bills are a high priority (e.g. Council Tax) and what the consequences are of not paying these on time. Failing to pay certain bills could affect their credit rating for six years, which could lead to difficulties in getting a new mobile phone contract. Uh-oh no more Snapchat!
- Savings decisions - Talk to your children about savings decisions and how this pays for the nice-to-haves like holidays and Christmas presents. It is also a good idea to have a rainy day fund for car repairs or unexpected bills. If they have a good attitude to saving, then they are less likely to tap up the Bank of Mum and Dad!
- Go Henry - For children aged six - 18. Get them used to having responsibility for their own money, budgeting and saving with Go Henry. This is a pre-paid pocket money card with unique parental controls. An easy and fun way to pay pocket money and teach children good money habits.
According to the survey*, three in five parents feel confident talking about money with their children but feel their own money management “may not set the best example”. Try out our free Financial Health Report to see where you could improve your personal finances.
*The Money Advice Service commissioned a survey of nearly 5,000 youngsters ages four - 17 with questions also directed at their parents.