Since 2014, financial education has been incorporated into England’s curriculum for secondary schools. While this was a step forward in improving financial education for children and school-leavers, the problem was far from solved. Exploring this in more detail is stocks and shares ISA provider, True Potential Investor.

The impact of altering the curriculum

In 2016, The Money Charity found that 90% of schools delivered financial education following its 2014 addition to the curriculum. While uptake figures are pleasing, the quality of the education delivered tells a different story.

Surprisingly, the majority of teachers rated this financial education as somewhat or very ineffective — with 66% saying so. In fact, three out of five teachers said the curriculum change had no impact and worryingly, a third of teachers didn’t know financial education was on the curriculum. This is potentially because of a mix of factors, from insufficient teacher training to the topic’s lesser position amongst other subjects in the curriculum.

So what are the effects of this? Research from The Money Advice Service has found that children aged 12 to 17 whose parents made their spending decisions for them were more likely to spend unnecessarily and have poorer money management skills.

It becomes clear that both teachers and parents have a responsibility to educate their children financially. 80% of parents believe it is their responsibility to teach their children about finances — yet one in six don’t feel confident doing so. The following tips provide some suggestions on educating your child at each stage of their financial journey:

Start at the beginning

By the time they turn seven, your child will already have established their attitude to money, The Money Advice Service claims. It’s important that you start talking to them about money and what it means early.

  • Let your child count out your money when you need to pay for something. Doing so can help them not only get used to handling and counting money, but also improve their numeracy skills.
  • Give your child the cash to hand to the cashier — it will educate them about the exchange that takes place.
  • Use educational play. Many children will like to play shop, which will again help them better understand money and value while still remaining fun.

Essential vs non-essential spending

Your child’s wants and needs are often very different. It’s normal for your child to not always understand the expense of what they’re asking for.

  • Don’t be afraid to say no to buying your child something. Encouraging your child to save up for something they want rather than you buying it for them will help your child understand the value of money and delayed gratification.
  • Compare the cost of the item to other, real-life expenses for older children. For example, is a £300 games console enough to cover the family’s monthly food shop? This perspective can help children realise the difference between what they want and what they need, and realise that they can’t always have everything.

Setting and working towards them

Don’t forget to educate your child about saving too. If they start saving towards a games console or other item, encourage them to budget with the money they have. This is applicable whatever the age of your child, whether they’re dealing with pocket money or wages from their first job.

  • Explain to your child about the benefits of splitting their money between the cash they spend, what they save and what they donate. Giving them three jars or piggy banks is probably one of the easiest ways of doing so, so they can see a clear divide in their money. For older children, this can be done through having a separate current account to their savings account, while you may want to give younger children their pocket money in lower denominations so it can be easily split.

Financial education for life

There’s a huge jump between financial responsibility when a child is at school and living at home, and when they move out to college or university. As a parent, you’ll need to prepare them the best way you can:

  • Take a step back to give them space to make their own decisions. As they get their first job and start earning money for themselves, they may be tempted to splurge with their first wage, leaving them short for the rest of the week or month. You can disagree with their purchases, but try not to be too controlling over how they spend their cash. Eventually, when they’re tired of being skint for the majority of the month, they’ll realise the importance of budgeting and will consider a purchase more before buying it.
  • Encourage their work ethic. Earning on their own is one of the best ways to understand the value of money.
  • Prepare them in advance for university or student life. When the student budget is limited, it’s very easy to turn to credit cards with a high APR. Make sure they understand the options available to them as a student and encourage them to choose the best ones.

Financial education is important from a young age to help ensure a responsible attitude to money throughout their lives. Leading by example is an excellent way of doing so. True Potential Investor’s parent company, True Potential LLP, has partnered with the Open University to establish the True Potential Centre for the Public Understanding of Finance, establishing three free personal finance courses to help improve financial confidence across the UK. More information can be found here.