Early intervention essential to teach children good money skills

By Frank Conway

Research shows that children as young as age seven form lifelong money habits. Financial education content and apps can help them develop good money habits that will return a lifetime of benefits.

Children from age seven develop life-long money habits

Many Irish adults struggle when it comes to the essential aspects of money. Like how credit cards really work. Or the real cost of buying a home…or a car. And when it comes to choosing the right protection policies, many struggle to identify their financial needs correctly.

With the rise in contactless payments, more and more adults are increasingly disconnected from making day-to-day money decisions. Not only do they not shop for better value, some don’t know where to start.

We are often tempted to group people into the ‘saver’ and ‘spender’ camp but this is just the tip of the iceberg. In fact, to really understand money, there are six key pillars; earning and income, saving and spending, credit and debt, risk and protection, investing and growing money and finally, financial decision-making.

In this context, savers and spenders are just opposite sides of the same coin, they are just one sixth of the complexity of money and if this were just the focus of any financial education programme, it would miss by a long-shot.

Money habits from age seven

Experts at the UK’s Money Advice Service believe that children as young as age three form an awareness of the significance of money. However, by age seven, many children are already forming money habits that can last a lifetime. The research was carried out in collaboration with a leading UK university a number of years ago.

In light of the UK study, MoneyWhizz (www.moneywhizz.org) set about to identify how best to provide financial education that was both engaging and relevant.

This is European Money Week, a pan-European initiative to support parents, families and educators to promote better money skills through better financial education.

Financial education can really make a difference in the lives of all our citizens. This is a major part of the financial education programmes developed for a wide array of age groups.

For many Irish people, the increases in life expectancy, the abandonment of final salary pension schemes and a whole range of other factors means that more and more, families are having to burden greater financial responsibility. It is essential they are supported through financial education to be better prepared.

Taking the first steps

Talking Cents is a new financial education programme that has been growing a popularity among primary school teachers across Ireland. With over 25,000 children now running this commercial-free programme, teachers and kids can engage with relevant and engaging financial education material and supports.

One important lesson we have learned over the years is that parents and teachers usually do not have the financial knowledge to teach children good money habits. In fact, in some cases, especially those that support secondary school teachers, it is the teachers that are often saying how much they learned from financial education classes provided in-school to students.

In a recent financial education school survey conducted among primary school teachers, a majority want more financial education supports, not less. All viewed financial education as a critical life skill; all wanted more help and supports to help them in developing a robust and modern programme of financial education to promote better money habits.

What teachers have asked for is more material that provides the basis for helping kids to develop critical thinking skills when it comes to money. In other words, they don’t just want to one-directional teaching process, they want a two-directional money discussion programme.

Financial personalities

One thing we know about adults is there are many financial personalities.

People are no longer grouped into the narrow bands of ‘savers’ or ‘spenders’. That was a simple definition of how some people handled money. Today, we know that while some people may be great savers, they may also be terrible investors. And unfortunately, to really make the best financial decisions, people will need to make investment decisions more and more if they want their savings, and pension to grow.

So, how can a parent or a teacher teach a seven-year-old about money? Well, you start with the basics and work out from there.

A key feature of Talking Cents is it has been developed to provide discussion time about money between parent / teacher and children about money. But since children age seven and age twelve are very different, the is specific content for younger and older children.

The material provides a series of stories and also, a range of activities that support the development of important skills, like patience and planning. One simple activity is to give children pocket money and a series of colour codes savings boxes for short-term, long-term and medium-term savings goals. This simple activity encourages kids to consider time and planning their savings and spending activities.

The art of conversation

At one Dublin school teachers wanted more content, more discussion material and more resources. At first, my concern was that since the school was located in what might be referred to as an economically ‘disadvantaged’ area, parents might shy away from their kids being taught better money skills but this was not the case at all. In fact, the reaction from teachers was that parents from all backgrounds are eager for their children to be supported in the development of good money skills as they view it as a critical life skill and not a statement of their present situation.

In developing the Talking Cents financial education programme, the first objective was to make the content highly relevant and very engaging. To achieve this, I developed a series of storylines that children could relate to and feel comfortable discussing. Additionally, a key feature of the programme was the development of age segmented content. This was critical as the language of money for an eight-year-old is very different to that of and eighteen-year-old.

The reaction from teachers across Ireland has been fantastic with over 350 school teachers and 25,000 primary school students now running Talking Cents financial education.

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