>To celebrate the imminent launch of the first book in The Financial Fairy Tales series –
“Dreams Can Come True” we have prepared a special sneak peak video of chapter 1.
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>The current financial crisis has sharpened the focus on the need for better financial education across all segments of the population. Just as information and guidance on healthy eating and exercise can prevent a lifetime of obesity, effective financial education, when started at an early age, can prevent chronic financial health problems later in life.
Where this education should take place is a matter of debate. Whether education and guidance of this sort would be more effectively shared by parents and families or taught formally as part of the school curriculum. Here we discuss some of the issues on both sides.
Schools
Financial literacy is an important element of preparing young people for adult life, which in turn is one of the main purposes of the education system. Lessons in money and financial matters can be integrated into many other existing subjects, such as mathematics, citizenship, PSHE and with some imagination into art, design and manufacturing based subjects.
Teachers have the skills of explanation, motivation and effective delivery. They also have access to resources, books and technology. Banks and other financial providers have programmes available to support teachers and schools.
Teaching financial literacy in schools guarantees a uniform, minimum of knowledge. Admittedly the quality and effectiveness may vary from school to school, region to region, yet a basic level of delivery can be assured.
Children are in a learning environment at school and therefore may be more receptive. Some parents may lack the necessary time, expertise or interest to teach their children about money. This may perpetuate a downward spiral, where a lack of awareness is passed from generation to generation.
Parents
At present few teachers have the necessary experience or knowledge to competently teach financial education. Consequently they may possibly pass on their own beliefs or bad habits concerning their own finances. The training and resourcing required to up skill teachers will take time and money.
School curricula are already crowded with mandatory content. New criteria can only be added at the expense of something else.
Regardless of where you are reading this, is the state in the best position to impose a financial education curriculum? Is the example of huge debt and continually spending more than your income a great example to follow? So too, many of the banks whose financial attitudes have heightened the current economic problems.
The financial world exists outside of the classroom and many would argue that so too lie the better opportunities for learning. Examples include taking children shopping, encouraging them to save and take part time jobs. Showing by example how to budget, pay bills and make financial decisions are far more real when experienced in context.
We should also consider the differing religious and moral beliefs of parents and communities. For some, the principle of tithing or giving 10% to church or charity is fundamental and may conflict with a school curriculum. Other families and traditions have very strong views on debt or use cooperative systems for providing within communities.
These are some of the main arguments in the financial education debate. A definite solution is not immediately clear, however what is evident is the need for some kind of change. Parents and in fact young people themselves can access a range of financial information from a whole host of providers. They need not wait for others to take the lead. Schools on the other hand should be encouraged to provide at least a minimum explanation of key information as a safety net for those unable to access the information for themselves.
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The Financial Fairy Tales are a series of books to help young children learn about money, finance and prosperity principles.
The first book – Dreams Can Come True will be available at the end of January.
A free download of the first chapter is available from the site at www.thefinancialfairytales.com
>Continuing social, economic and political change over the last five years has meant that the need for financial capability in young people is even more pressing. In many western counties issues surrounding increasing levels of personal debt, crashing markets and their effect on pensions mean that there is a greater need for individuals to take a more active and informed interest in their own financial future.
This article looks at various initiatives for teaching children about money around the world.
In South Africa, Teach Children to Save (TCTS) is a one-day initiative designed to spotlight the importance of teaching the country’s youth about saving money. The objectives of the project include:
To raise awareness about the benefits of savings, financial planning and foster a culture of saving. To demonstrate the important role that the financial services sector can play in creating a financially literate nation. To initiate a national program that encourages a collaborative, industry-wide effort to increase financial literacy.
Teach Children to Save South Africa (TCTS SA) was launched during July Savings Month on the 25th July 2008. On this day, volunteer bankers and financial professionals became teachers for a day and delivered a one hour savings lesson to learners in grades 4 to 7. This pilot initiative laid the groundwork for an annual event that spotlights the important role that financial service providers can play in educating the nation’s youth about saving. While modelled on the U.S. program, TCTS SA was customized to align with South African culture, financial education needs and the school curriculum especially Economic Management Science.
Scotland was the first part of the UK to publish guidance for schools in this area, back in 1999 Learning and Teaching Scotland, published Financial Education in Scottish Schools – A Statement of Position. This document describes managing money is “one of the most important and challenging features of everyday living” while outlining a minimum entitlement within the school curriculum. Their aims are for young people to understand key financial and economic ideas; be skilled in managing their financial affairs; recognise the importance of using financial resources responsibly and be able to operate in a confident and enterprising manner.
The Scottish programme as part of the 3-18 Curriculum for Excellence is under-pinned by the expectation that every teacher is a teacher of Numeracy, Literacy and Health and Well-being. A thematic / topic framework is suggested which schools may adapt to their particular needs. The four main elements of Financial Education in Scotland include: Financial Understanding, Financial Competence, Financial Responsibility and Financial Enterprise
An Australian report, ‘Financial Literacy – Australians Understanding Money’, found that young people are particularly interested in learning more about issues such as budgeting, saving, managing debt and avoiding financial scams.
Australian schools have introduced a nationally agreed Framework that provides an integrated cross- curriculum approach for all students from Kindergarten to Year 10.
Consumer and financial literacy will be integrated in programs across English, Mathematics, Science, Humanities – (Business, Commerce, Economics, Technology and Enterprise) Civics and Citizenship and ICT. This will allow all Australian students in their compulsory years of schooling to develop knowledge and understanding, skills and values in consumer and financial literacy.
An example of a Chinese approach to financial education is a theatre program for children aged between 8 and 12 years old in the cities of Beijing, Shanghai, Guangzhou and Shenzhen.
The program is based on a comic book, entitled “Agent Penny and Will Power in Operation Finance”. Scenes are based on stories of daily life and present students with commonly-used financial tools and concepts, including budgeting and compound interest, as well as the formation of healthy financial habits.
According to schedules of the program, the Cheeky Monkey Theatre, presenting itself as the world’s first ‘Chinglish’ Theatre Company, will visit between 40 and 50 schools in Beijing, Shanghai, Guangzhou and Shenzhen over the next ten months, and this play is expected to be seen by around 20,000 children.
In summary, financial literacy is regarded in many countries as a key life skill. The financial world is characterised by a wide range of choices and often high complexity, and as consumers we all need to take advantage of this dynamic environment. Young people are being targeted as consumers at an increasingly early age and may face complex financial choices. As 18 year olds, they are likely to have access to credit and loans in a way that would have been unheard of 20 years ago. Providing young people with good financial literacy skills helps to establish responsible attitudes and good habits from an early age. It helps foster an attitude to managing money that can enhance their long-term financial security and lifestyle.
>Financial Fluency – Teaching children about money
It is a widely held belief that the earlier children learn a foreign language, the quicker they will be able to pick it up and achieve fluency. The same is also true when it comes to teaching children about money and developing financial fluency. Teaching children from an early age how to save and budget in a fun and educational way can lay the foundations for sound money management later in life. A University of Minnesota study indicates that with as little as 10 hours of financial education, teachers and parents can positively affect children’s future saving and spending habits.
A good place to start teaching children about money is by demonstrating that money is used in exchange for goods and services, showing them that in making their own purchases they are in fact trading with the shop owner and receiving the product in exchange.
As an example, next time you are shopping, try to have the exact change for the product and give it to your child. Let your child hand over the money to the cashier and after you have left the shop, have a chat about how the money paid for the item. It is important to always approach teaching children about money with openness and honesty, giving a constant and clear message. Explain to them why they can or cannot have certain items they wish to buy. You can’t always say yes to a request for money and if it has to be a no, it does few favours being over indulgent, but equally the ‘because I said so’ clause has little educational merit.
Before long your child will have a basic understanding of money. When this happens you may wish to start explaining the bigger picture. You might consider showing children how the whole family benefits from money via a visit to the supermarket. Once there pick out two similar products, perhaps a well known brand and an own label and allow the child to make the choice. If they choose the supermarket’s own brand, allow them to make a further purchase with the saved money. This might be a useful starting point for a discussion about value vs. price.
Consider also the type of signals about money that your child picks up on. You may feel it’s important to let your child know family money matters are private, and not for discussion outside the home. If however, as parents you talk in hushed tones over bills and bank statements, your child may deduce that finances are something to be secretive and furtive about. Similarly, if they pick up some stress and anxiety over money, this too is a value that can be carried forward into adult life.
7 tips to help teach children about money
1) Fun, fun, fun – make a game of both saving and spending. If only spending money is fun then they will not associate any pleasure with saving.
2) Routines – When they receive money as presents or from the tooth fairy establish a routine, like putting some or all of it in their piggy bank or savings account. They will most likely take these traditions forward into their own families.
3) Consistency – If you pay pocket money in return for helping around the house make sure they actually do the work. Even very young children can be responsible for tidying away their own toys or clothes. It’s a good idea to pay a set amount on a regular day but encourage their entrepreneurial side by giving them the opportunity to earn more if they seek it.
4) Look after the pennies – Turning off the lights, saving their pennies and giving small donations to charity collections are small things that they can do to create positive habits which may last a lifetime. Ensure that you explain why you are doing it and what the benefits are. Charitable giving can illustrate to your child that there are others less fortunate and introduce the idea to be grateful that they have more than enough.
5) Consequences – When your children ask for something, rather than say no. Ask them if they would like to buy it from their own money and explain what the consequences are. You may find that they are more reluctant to spend their own money than they are yours!
6) Praise, praise, praise – We may learn by our mistakes but by praising we reinforce positive behaviour and will encourage children to do the right thing out of choice ‘because it feels good’. This can be applied to saving, spending wisely and giving to charity.
7) Spend and save – when your children are receiving pocket money, teach them to save either some or all of it. It is always a good idea to let them spend a little however, as this encourages a work-like mind which will set them in good stead later in life.
For a fantastic new book designed to teach children about money in a fun and entertaining way, please visit thefinancialfairytales.com
