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10 Reasons Why Money Skills Should be Taught in Schools

December 2nd, 2011 Posted in financial education in schools, teaching children about money

We all know that schools are supposed to teach reading, writing, and arithmetic, but what about the ability to handle money? With more Americans in debt now than ever, it seems to be logical that students be taught more than just who is on the money. Below, we have gathered a list of ten reasons why money skills should be taught in schools.

1. Too much debt – As noted above, more and more Americans are faced with more debt than ever. This can include house payments, student loans, bank loans, and much more. Having too much debt can cripple a family or individual and should definitely be taught in schools.

2. Credit cards – Another way people pile up so much debt is through the lure of credit cards. By promising a big rush now, consumers often run up their limits within a period of months and can spend years paying it all back. Teaching how credit cards really work, along with the topic of compounded interest, can give the kids a truly valuable lesson.

Perhaps you could use this credit card calculator to show them how long it would take to repay a credit card.

3. Bankruptcy – Other than paying debt off, bankruptcy is another way people get out of debt. Not only does bankruptcy carry a high penalty for those filing for it, it is also bad for the economy as a whole.

4. Foreclosure – If you own your own home or are making payments on it, getting too far into debt can put your biggest investment at stake, your home. This is doubly so for people who take out a second line of credit on their house and is taught too little in schools.

5. Retirement – It may sound like a far off time for your students, but having a retirement plan is never a bad idea. Having teachers explain why saving for retirement can be a good and rewarding thing.

6. College – This major event will come as soon as students are done with high school. Teaching kids about money will better prepare them for the world of college where everything from tuition to toilet paper can be an expense.

7. Budget planning – No matter what age the children are, if they can count, they can make a budget. This includes having teachers give children an imaginary income, family, expenses, and having them plan out what they want to spend on what.

8. Investing – Older children can take on this challenge. Have the children invest an imaginary amount of money in a stock. Then have them check it daily to see how much it rose and fell.

9. Taxes – No matter what your students go on to be, they will have to pay taxes on it. Have the children fill out mock 1040 forms to see how much they will pay in taxes, social security, etc.

10. Saving – One of the most important money skills ever, kids see far too much of celebrities flashing their cash and too few who save money. Teaching them the pro’s and con’s of each will give them a good foundation in the future.

Holly Kearny manages the site Teaching Degree. Her site helps students find the right college to get a teaching degree.

teaching money in schools, teaching money skills

Gender pay gap starts early with pocket money

July 21st, 2011 Posted in teaching children about money

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The economic downturn has hit many wallets – but it has also hit children’s piggy
banks, according to a report from Tesco Bank. The UK’s pocket money budget
currently stands at around £40 million per week*, despite the fact that one in
four parents (24%) has reduced the amount of pocket money they give to their
children following the recession.

The report, entitled “Every Little Helpers” and the first in the Tesco Bank “Family
Matters” series, reveals that the majority of parents (71%) across the UK
expect help around the house from their children (aged 4-15 years old) in
return for pocket money. The most generous parents can be found in London,
giving children £7.81 per week in return for household chores, whilst the UK
average is £5.80.

Today’s mums and dads expect children to complete chores ranging from tidying their own
rooms to mowing the lawn in return for cash.

Top five pocket money earners

London £7.81

Swansea £6.68

Glasgow £6.46

Liverpool £6.38

Wolverhampton £6.26

Bottom five pocket money earners

Wrexham £2.50

Chelmsford £3.40

Worcester £3.50

Leeds £4.29

Bristol £4.33

Gender pay gap starts at an early age

The report also suggests that gender differences start early on in life. Boys are
more than twice as likely as girls to receive between £16 and £20 a week but
they are also more likely to spend their money within days. While girls are
streets ahead when it comes to saving, over a third of all children (38%)
regularly save-up their hard earned cash for something they really want.

Dr Elizabeth Kilbey, a leading child psychologist working closely with Tesco Bank
on the research, says: “It’s great to see so many parents across the country
rewarding and reinforcing children’s good behaviour with pocket money they can
then choose to spend or save. You can never start financial education early
enough in a child’s life and this approach is by far the best way to teach
children good habits.”

The majority of parents surveyed (65%) said they have had the financial equivalent
of the birds and bees conversation with their children; where money comes from
and what it’s for. “Financial knowledge is best learnt from a young age. While
parents can make it fun, money is not a joke and children should understand
this clearly. Parents work hard to provide things for the children. It’s
brilliant to see parents across the UK talking to their children about this,”
Dr Elizabeth Kilbey added.

Parents helping kids onto savings ladder

Parents are actively helping their children onto the savings ladder and 35% of children
under 16 now hold their own savings account. However, over half (54%) of the
children in the UK are traditionalists, preferring to keep their coins and notes stashed safely away in a piggy bank.

Tesco Bank’s “Every Little Helpers” report explores children’s spending and saving
habits and how they can be taught the value of money through something as simple
as regular pocket money.

David McCreadie, Banking Commercial Director at Tesco Bank, said: “We commissioned
this research to understand the changing dynamics of family spending and this
report has provided us with interesting findings. It’s great to see parents
talking to children about money and teaching them savings habits at an early
age through pocket money.”

The report is available now for parents to download free at https://mediacentre.metafaq.com/help/news/everylittlehelpers/.

children's piggy banks, every little helpers, pocket money, pocket money statistics

How to learn the savings habit – video

May 21st, 2010 Posted in financial literacy, financial literacy for kids, kids and money, teaching children about money, teaching kids about money

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Please enjoy this short video which highlights 5 easy and fun ways to encourage your child to start the savings habit.

We like the Moorjar – spend, share, save system. Its an unique money box with three separate areas. Have a look here

financial literacy, kids and money, teaching children to save

The Benefits of Teaching Younger Kids About Money

April 14th, 2010 Posted in kids and money, teaching children about money, teaching kids about money

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The Benefits of Teaching Younger Kids About Money

The benefits of teaching your children about money can be both immediate and longer term. In the short term, you are encouraging them to develop good saving habits, which may last a lifetime. They will also learn how to make informed purchases, and perhaps even understand why they can’t immediately get everything they want. In the long term, you are helping them avoid accumulating debt. By showing them the value of saving for the future, you can help your children plan for their financial security.

It’s never too early to start teaching you kids about money. Allow your children to help you determine what they are curious about and how best to teach them. You can use their questions to help develop lessons and conversations about money.

Explain to children that money is earned and is relative to the value that people give. An ideal time to begin teaching your children about the basics of money is when they first begin to notice it. To a young child, money comes from Mum and Dad’s pockets or purse. Or the magic hole in the wall machine that spouts dollars after merely pushing a few buttons. It’s understandable therefore, for kids to assume that money is readily available whenever it’s needed.

When you are trying to explain why you can’t meet their every demand, it’s better to avoid an overused response such as, “Money doesn’t grow on trees” when a more constructive explanation may serve both of you better. Consider instead encouraging your child to look at the consequences of the purchase. If they have A they can’t have B, or how could they save or earn the money for themselves?

Even very young children can begin to understand the concept of earning money. Explain to your children that money is received in exchange for working or as a return on an investment, and that you can only spend what you earn. To help them understand what it’s like to get paid on a schedule, begin paying an allowance. Then help them set goals for how they spend and save their allowance. It’s important, however, to make sure that you stick to the payment schedule; otherwise the lesson may be lost.

You may like to consider the spend; share, save method, where everything your child earns or receives they divide into the three areas. In this way you are encouraging them to develop good money management habits and also the principles of charity and helping others. You may consider adding a little extra to their savings as a way of demonstrating interest.

When paying pocket money or an allowance it is important not to set up an entitlement mentality in your child. If they think that they have a right to receive money from you from an early age they may grow up with that mindset. By all means link the allowance to chores and jobs around the home but consider that some tasks which contribute to the household should be done automatically and not for paid reward. You may like to create a separate list of family or community activities which the entire household share, along with an agreed list of extras activities for which your child will receive reward.