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A Guide to teaching Financial Literacy to Children

As strange as it may seem education conducted in our schools concentrates on remembering facts dates and using skill sets that will never be used again. I understand that there is a method in this style of education and overall and it is successful. Have, however never found a need to use the logarithms that I spent a long-time learning. We should teach life skills at school. The utmost important of these is Finance. How and what should we tutor our children about finance?

What is Money?
We should teach the concept of money in its simple form to children from an early age. I often hear parents telling their children that they have no value of money. How can they if they have not been taught about it. We should teach that it is something that we receive when we sell a product or service that can then be used for buying products and services. By supplying pocket-money parents help to tutor children about money. A child soon learns whether he has enough money to buy something.

Budgeting
We should help to teach children at an early age how important it is to budget. Balance the amount of income against expenditure. This extends the lesson learnt from pocket-money toward long-term living. A budget shows if something is affordable or not. Lack of budgeting skills has a serious effect on how we live.

Banks
By opening a bank account for our children and involving them in controlling the account, they will start to understand how banks work. They are a complex business that deals with money as a product in many ways. They are also a rich resource of financial information.

Insurance
Banks can protect Money; insurance can protect possessions against loss or damage. Children can understand the concept of security and protection and its importance they do from an early age. There are financial products such as a private pension that are often thought of later in life when they should be understood and considered when young. There are several resources that can recommend the best way to explain insurance to children.

Stocks and Shares
How Stocks and shares work is not understood by countless adults and yet today the markets are accessible to anyone. If children are aware of the basic principles of investing in the markets, they are able consider if it is something, they could be involved in. If parents start an ISA for children it can offer a good introduction to the concept of the stock market.

Finance is best taught to our children initially in its simplest form. Over a period, more depth on the subject will develop so that by the time they leave school they will already understand finance. They will also understand where to turn for advice on different areas of finance. With this knowledge they will later be able to create qualified decisions that can shape their financial futures.

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Susan Paige

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