According to Credit Action, less than one in ten people think we are financially educated as a nation. Despite the fact that consumers take out financial products such as credit cards and loans as soon as they hit 18, worryingly, on average most people don’t become knowledgeable about personal finance until they are 27 years old.
So how can we ensure our children understand sensible money management and the dangers of debt from an early age?
We’ve pulled together a few tips on how to educate children on the importance of money:
Money doesn’t grow on trees – if your children see you taking money from the cashline, you need to explain to them that it is not free money and that you’ve had to work hard for it to get there.
Pocket money – provide pocket money if your child earns it e.g. helping to set the table, tidying their room or for any other age-appropriate household chore. Explain to them how saving a certain amount each week will allow them to buy a special treat in the future.
Watch the news with them – watching economy related stories unfold can open up discussion and help educate your child about how worldwide events can impact family finances.
Budget – explain the importance of budgeting and not spending more than you earn. Getting into a habit of budgeting (keeping a note of what you earn and spend) will set them up well for later life.
Set a good example – need we say more.