The importance of effective money management can never be underestimated, and learning the necessary skills from a young age can set you up on the path to lifelong financial security. But just when should children start being taught about money? According to research from AA Financial Services, the ideal time to start is age six.
According to the figures, 93% of parents surveyed think that it's important to teach children how to manage their finances as they get older, with most believing that age six is the right time to start. Just 11% believe that children should learn about money at age 10 or older.
Pocket money is perhaps understandably seen as the best way to teach money management – 65% of parents said that they gave their children pocket money in order to teach them about money – as this is the first time a child will be able to determine what to spend their money on. Instilling the importance of saving up that money for a bigger treat, rather than impulsively spending it straight away, could be an especially good habit to get into, and it's something that 45% of parents encourage on a regular basis.
Other ways to set children up for their financial future include opening a junior savings or bank account (44%), giving them money for doing chores around the house (41%), explaining the importance of money management (38%), helping them set savings goals (24%) and playing money management-related games (26%), and all of these methods – and more besides – could be highly effective.
The majority (84%) of respondents believe that it's a parent's responsibility to teach their children about money, but 59% think that teachers should also play their part, believing that personal finance education should be extended to primary schools – something that's now on the National Curriculum for secondary schools, but not before.
Teaching children about finances from a young age could be incredibly beneficial in the long run, but it's something that many of today's high school leavers have missed out on, with legislation to include it in the curriculum only being introduced last year. It's perhaps no wonder, then, that the ifs University College found that 70% of teenagers are now leaving school without having received any formal financial education.
This is particularly worrying given the fact that many are about to embark on university life, where they'll take on greater independence and financial responsibility, including planning their own budget for the first time. Many won't even know how to do that, and this could open them up to long-term financial problems.
"There have been many past studies suggesting that teenagers are ill-equipped to handle their personal finances as they enter adulthood and are often baffled by money management terms," said Kathryn Thomas, director of AA Financial Services, "so it's encouraging to see that modern parents want their children to understand how to be responsible with their money and give them age-appropriate challenges."
It's clearly a good habit to get into, and the fact that money management has just been introduced in schools will no doubt be welcomed by many. Many more will hope that it'll soon be extended to primary school teaching, but in the meantime, a bit of home-schooling (from a financial point of view) could go a long way.
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