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3 Money Lessons for Your Teen

Teaching children budgeting is like riding a bike. You gradually show them how to do it and once they learn it, they are on their own without your support. After that, they will never forget how to ride a bike. After all, you do want your child to have a great annual credit report to present whenever required. So, given below are a few approaches you may adopt to make your budgeting lessons more effective for your child:

3 Money Lessons for Your Teen - young woman at a cash machine image

1. Give Your Teen A Debit Card – Start with a debit card and gradually progress to credit cards. He will have a limited amount that he can use and has to manage in it. Giving your teenage child a debit card will teach him to budget his expenses. When you receive the statement, sit with him and review it. Discuss what was essential and what expense could have been avoided. He will soon learn the art of budgeting.

2. Add Him As An Authorized User To Your Credit Card – After he learns how to budget his debit card and has managed his account successfully without any overdraft fees, you can take your finance lessons to the next step. Add your teen child as an authorized user to your credit card. There are two benefits to this. The first is that he will have a credit history and the second benefit is that he will learn the intricacies of managing a credit card.

Explain the details of credit, with an explanation of interest rates, APR, how to repay his bills and how he can find out errors in credit card bills. Teach him to consider all these factors when he makes purchases. This is also the right time to give him lessons on credit report and credit score and how credit card bills affect them. Explain how a low credit score can make him pay high interest rates when he will want to take a car loan for his car purchase later on in life among other things.

3. Let Him Prove That He Is Financially Responsible – Now that he has a steady income and has proven that he can manage his expenses, it is time to set him free. Let him get his individual credit card and start building a credit history. You have taught him well and it is now time for him to prove that he is financially responsible.

Credit lessons begin early in life. You can teach your child how to manage in a limited budget and then supervise them. They are going to need these lessons in future.

budgeting lessons, money lessons for teens, Teaching children budgeting

Making Finance Fun in Primary Schools

March 12th, 2012 Posted in financial education in schools, kids and money

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Here is an article recently published in Primary Teacher Update exploring how primary teachers can teach younger children about money.

Summary
However you approach financial literacy, remember the three essential
elements – make it Relevant, Appropriate and Fun.

Teaching children about money does not have to be complicated, full of difficult maths or require you to be an expert.

Helping them develop the essential life skill of managing their money is both rewarding and enjoyable. It is also worth remembering that one day their taxes will be paying for your pension!

Resources available
 A good place to start is the pfeg website (www.pfeg.org.uk). This is a charity set up specifically to help teachers deliver financial education. It can provide guidance, materials and even experts to come and visit the school. All the recommended resources have been assessed and passed as fit for use in the classroom.
 Many high street banks and building societies offer financial literacy programmes. It can be helpful to have a member of their staff visit and talk about what they do. Be careful, however, that they are promoting your agenda as well as their own.
 The Financial Fairy Tales are a series of books accompanied by activities and a teachers’ guide. They are designed to make learning about money fun by presenting values and techniques through stories and activities.

A free story and sample materials are available to readers from
www.thefinancialfairytales.com/ schools.

Please share with your colleagues and feel free to leave your comments. The full article can be downloaded below:

Financial Fun in Primary Schools

primary school financial literacy, teaching money in schools

Children’s ISA’s – What You Need To Know

November 20th, 2011 Posted in kids and money

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It’s commonly believed that in the UK Children are exempt from tax. This is in fact a money myth. They are treated in exactly the same way as adults, which means each child can in the 2011-12 tax year earn up to £7,475 tax free from income, savings or investments. Grown-ups who enjoy managing money sometimes look into an online accounting degree.

Usually children under 18 don’t earn that much from part time jobs etc, apart from a few young entrepreneurs, hence the often held belief that kids can earn tax free.

Assuming your child won’t earn more than £7,475this financial year (watch out child prodigies!),you can ensure that any interest is paid without the tax being automatically deducted by filling out the Inland Revenue R85 form (available from most banks or online).

Alternatively you can open a children’s ISA which allows interest to be paid free of tax plus attract a much higher interest rate of upto 6% in some cases. Children’s ISAs were launched in November as an encouragement for children (and adults on their behalf) to save money. Many new accounts offer incentives such as piggy banks or high street vouchers. We think they should give away sets of The Financial Fairy Tales books instead as this will have a win win effect of encouraging new accounts and teaching children about money, (marketing execs take note!)

In essence children, parents, grandparents or anyone else can make deposits of upto £3600 in a tax year. The money stays on deposit where it cannot be touched until the child is 18. This makes it a great way of saving for future university fees, a first car or a gap year in the Caribbean!

Here are a round up of some of the best articles we could find on the subject of Children’s ISA’s

http://www.moneysavingexpert.com/savings/child-savings-tax-free

http://www.bbc.co.uk/news/business-15522384

Once you have decided on opening an account, this is a great opportunity to discuss the benefits of saving and start a money conversation with your children. Keep them involved with the choosing, the paperwork and making the first deposit.

Who know’s their savings might need to help look after you when your pension runs out!

Child savings accounts, Children's ISA, tax free savings for children

How to make your kids into good financial managers

September 17th, 2011 Posted in kids and money

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How to make your kids into good financial managers

These days, kids are getting into debt early. We’ve all heard the stories about students racking up thousands of dollars worth of debt and this can start even earlier when kids are in their teens. With credit card companies offering sweet deals as soon as kids are old enough to sign, it’s no surprise that so many are ending up in debt. But it doesn’t have to be that way. As parents we can do our part to teach children financial responsibility from a very young age. Here are some tips.

Get them a piggy bank

If kids are old enough to get money, then they are old enough to start saving. Get your kids a piggy bank so that they can start saving up the spare change they get from you, the presents from grandma and any cash that comes their way. Encourage them to put most of the money in the piggy bank and leave it there. That gets them started with the habit of saving money. After a while though, the piggy bank will get full and that’s when you move to the next stage.

View a selection of our favourite Piggy Banks

Get them a bank account

Your child is never too young to have a bank account even if you have to take responsibility for it at the start. You can make it into a big event to empty the piggy bank every so often, count up the money and deposit it in a bank account. Your child will enjoy seeing the bank balance grow even if he or she has no idea what to do with it yet.

The saving habit

Kids always want stuff so encourage them to take some financial responsibility. When they get money they can allocate some of it towards buying a treasured purchase, as long as they save most of it. Some parents use the matched funding method, where if a child is able to save half the purchase price the parent will pay the rest. This works well for younger kids with less earning potential.

The earning habit

Encourage your kids to do odd jobs to earn pocket money or boost their savings for a planned purchase. Having to earn the money themselves will give them a greater appreciation of what it takes to get it and they are less likely to fritter it away. This is one rule that you may want to apply with care because you have to make the distinction between the jobs that are regular household responsibilities and those which have earning potential.

Take them shopping

There’s nothing to teach your kids the value of money then taking them shopping with you so they can see exactly how much the products you buy cost. This also helps them to compare the relative costs of different brands so when they are older and go out on their own they won’t get a nasty shock. It’s also worth letting them see you comparison shop for household utilities. Let them celebrate with you when you get a cheap broadband deal or save money on electricity.

Encourage financial caution

This is one area where you can lead by example. Let your kids see that where possible you spend no more than you earn. Where you do need to buy something on credit you don’t spend excessively and you do repay it as soon as possible to avoid racking up high interest charges. Letting your kids understand the thinking behind your own money management practices is the best way to help them avoid a future debt trap.

Celebrate entrepreneurship

There’s more to managing money than simply avoiding debt. Sometimes you have to find innovative ways of making money. So when your kids want to set up a lemonade stand or start a vegetable delivery business, help them to plan and achieve it. However it turns out, they will learn a lot from the experience which will help them manage money well throughout their lives.

Build skills gradually

When children get used to having a savings account, let them move to a checking account once they are old enough. Also consider a debit card or prepaid debit card before allowing them to have a credit card. If you are going to give your kid a credit card then explain how credit works, how interest works and why they need to pay on time. Backed by the other lessons you have given them they will soon be adept at managing their own money.

children saving, financial management and kids, money and kids