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A toolkit for teaching kids about money-saving beyond the piggy bank
Emerging research indicates that the UK has some of the lowest rates of financial literacy in Europe, a figure associated with a lack in financial lessons from a young age. As part of an ongoing effort to address the gap in financial literacy, the English national curriculum now mandates financial education in secondary school, including lessons on saving, budgeting, and credit card rates. However, the underlying strategies of financial literacy, such as good saving practices, are applicable to primary school students, too. Financial lessons are a core aspect to teaching children about the outside world, so that they become better equipped to handle the challenges of adulthood at a later point.
Invisible money
Thanks to a rise in mobile banking and credit card usage, children often do not witness people buying products with physical money like notes and coins. It’s important to emphasize to your children that the money we spend online is real: credit cards are not abstract magic and come attached to serious responsibilities. However, you can use digital banking methods to teach kids about the financial repercussions of invisible money. For instance, budgeting apps can help your children gain a sense of how to allocate their money to various needs and purchases. You can also use digital apps to encourage automatic saving to foster good money habits.
Opening a bank cccount
At a young age, piggy banks are a fun way for children to start learning about money and to encourage saving. Compared to traditional banking, they are a more tactile experience than putting money into a bank account. However, once your child is old enough to accrue substantial amounts of money, it’s a good idea to open them a juvenile savings account at a local bank. Typically, these accounts are registered in a child’s name but linked to his/her parent’s bank account, so the parent has full control over the transactions and can monitor savings’ progress.
Explaining loans
Student loans are a good financial lesson to explain to your children so that they understand how university fees work and, if applicable, what taking out a student loans entails. It's a good starting point to explain the concept of interest and variable interest rates. In the UK, you can use a student loan repayment calculator to explain how much interest student loans will accrue over time. This tool is also useful for giving students an idea of how much of their future income will be proportioned to student loans. For younger students, a lesson in student loans is also a good opportunity to stress the importance of education, and the advantages of obtaining a university degree for their later professional lives.
The effects of teaching financial lessons are long-term: if kids develop good budgeting skills from an early age, they'll grow more equipped for the financial challenges of adulthood. Giving your kids a good foundation in financial literacy is vital for their personal development.