Eighty percent of parents in the UK agree that early financial education translates to better money management in adulthood but feel that they are ill-equipped to teach their children themselves. Children are increasingly exposed to household finance complexities in an era where four out of 10 adults in England and Northern Ireland struggle with basic arithmetic and only 36% of those ages 18 to 34 understand common financial terms. Aside from the fact that many parents are struggling with finances themselves, finance counselor and researcher Martha Henn McCormick notes that the relationship between early financial education and financial savvy in adulthood has not been thoroughly studied.
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The gap in knowledge is a serious concern, according to the English Department of Education, and the All Party Parliamentary Group on Financial Education for Young People (APPG) agrees. An APPG report in 2016 states that the financial literacy crisis is reflected in the UK’s adult population and that there is a need for schools to teach financial skills to reverse this trend. The people over at gkandpartners.com can provide some help in this regard, but curricula do need to be changed to include more financial learning. Research done by finance firm M&G encourages financial education at home as well and suggests parents should be the first to teach their children about money.
Financial Literacy Crisis
With children aged 11 to 17 now exposed to financial issues that they cannot understand or solve, the Department of Education is worried that the financial literacy crisis in the country will get worse. Representatives of the department feel that parents need to be more proactive in their children’s education and that financial education must start as early as age two. While it is still not compulsory for students to take up coursework on finance, it is not enough. The APPG reports that the debt to income ratio of 17 to 24 year olds in the UK is now at 70%, indicating a lack of financial education among the youth.
The Power of Bedtime Stories
Children love stories and parents should take advantage of this by including financial fairy tales during story time. The right stories can teach children about the basics of commerce, the value of money, and the importance of savings and investments. This is a good start for ages 2 to 11 because it is a fun approach to teaching financial knowledge that will come in handy in adulthood. Bedtime stories can also teach children how to grow their wealth and keep their expenses lower than their pocket money. There are a number of financial fairy tales that tackle money wasters, budgeting, and fundamental investment concepts that can give them insight on how to handle the money they have.
The Magic Magpie, a financial fairy tale about a girl who wants to get rich quick offers lessons on financial decisions and their consequences. The Toll Bridge is another good bedtime story for parents struggling to teach their children about money. The book teaches children about taxes, supply and demand, and trade and public spending. The Last Gold Coin is also a good option because it tackles issues on scarcity and what people can do to save the day. You can find out more about the Financial Fairy Tales books here
Knowledge is Power
A child’s brain is like a sponge, according to the International Journal of Science. This means that he or she will be able to master the fundamentals of money management if it is taught early on. Teaching your child about finances through financial fairy tales would later translate to financial literacy in adulthood and can save your child from the burden of financial troubles.
