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Britt Forum-Blogger© Original500© Member  Learning Contentment
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 Do you teach your children financial responsibility? If you do, a thousand Good Parenting Points to you! Sadly, most parents do not teach their children how to budget and be responsible with money, and most schools don't teach these skills, either. What can we do to encourage greater financial responsibility? Teach personal finance! Wendy van den Hende, chief executive of the Personal Finance Education Group, offers sound suggestions for educating children about financial planning, saving and responsibility. What are some of your tips? Teaching Kids a Valuable Lesson Sam Barrett from 29.08.07  Quadratic equations, periodic tables and the fall of the Weimar Republic - there are plenty of things we learn at school that we're unlikely to use again. But, when it comes to learning skills that could be used everyday in adult life, such as personal finance, there can be huge gaps in our education. "It's perfectly possible to go through school without any personal financial education at all," says Wendy van den Hende, chief executive of the Personal Finance Education Group (pfeg). "There is room for it within the curriculum but it's not compulsory." At the moment, personal finance education can fall into a number of different subject areas including maths, citizenship or personal, social and health education. Unfortunately, though, as it's not a compulsory part of the curriculum, whether your child studies it is largely up to their school. This lack of financial education is leading to problems. For instance, in research conducted among 14 to 18-year-olds, pfeg found that more than half of them had been in debt by the time they were 17, and although 90% worried about money, they saw overdrafts and credit cards as easy ways to buy things they couldn't afford. "We find there are some real problems with basic numeracy," adds Graham Durgan, who is leading a financial literacy initiative on behalf of the Institute of Chartered Accountants in England and Wales. "Fifty per cent of school leavers don't understand what 50% means." Record levels of debt With debt already reaching record levels and more people failing to save for the future, this lack of financial capability has serious ramifications for society. Unsurprisingly, therefore, there has been much discussion about how the government can help. In January, Ed Balls - the then economic secretary to the Treasury - introduced the Government's long-term approach to financial capability. With a primary objective of ensuring that everyone gets access to good quality financial advice, it also aims to promote better financial education and develop a savings culture among children and young people. This is something Balls is pursuing in his new position of minister for children, schools and families. In September next year, secondary schools will be able to teach a new programme of study, covering economic wellbeing and financial capability as part of personal, social and health education. Until now, no such programme has existed. Even though there is demand, from parents and schools, experts are cynical as to whether the Government will deliver. "There's a lot of noise about teaching personal finance in schools, especially since the Government proposed using the child trust fund as part of their education," says Miles Bingham, marketing director at Family Investments. "Unfortunately, though, there's already so much pressure on the curriculum that it won't be possible to include it on anything other than an optional basis." The Government's commitment to personal finance education may appear half-hearted. However, there are initiatives available for schools. Leading the way is pfeg, through its work with the FSA. Over the next five years, it's aiming to roll-out its Learning Money Matters programme to around two-thirds of the UK's secondary schools. This will provide teachers with all the support and advice they need to teach personal finance effectively. It is also planning a project to bring financial education into primary schools. GCSE, AS and A-level equivalent qualifications run by the ifs School of Finance are now offered in more than 200 schools around the country. "They cover topics such as budgeting, opening and accessing accounts and understanding different methods of payment," explains Rod McKee, head of financial capability at the ifs School of Finance. "They are relevant to everyday life, covering things such as understanding a payslip and differentiating between mobile phone tariffs." More informal initiatives have also been set up. Earlier this year Britannia Building Society set up a financial education programme for 14 to 16-year-olds in Staffordshire, Derbyshire and Cheshire and now plans to roll it out to other parts of the country. The Institute of Chartered Accountants is also developing a financial literacy initiative. This involves its members either teaching finance in schools or providing support to enable teachers to deliver the classes. However, while personal finance education is progressing, it's still very much down to parents to teach their kids about money. Financial education at home With many schools unable to provide the financial education you would like your child to receive, it's worth ensuring they learn good money habits at home. "Children are influenced by their families, and there are so many things you can do to help them learn about money," says Wendy van den Hende, chief executive of the Personal Finance Education Group (pfeg). Here are some ideas to get you started: • Infant school (age five to seven) At this stage, learning about money should be fun and include games such as playing shop. Piggy banks are another useful way to help children develop good financial habits. Van den Hende suggests explaining the decisions you make when you go to the supermarket. "Explain why you've picked a particular product and about the different offers that supermarkets run. You can also talk to them about the transaction at the checkout, explaining where the money comes from and why you get change." • Primary school (age seven to 11) Pocket money is a useful tool to teach a variety of financial lessons. "We give our 11-year-old daughter £3 a week plus a performance-related bonus of £2 if she has done well in her weekly spelling and maths tests," says David Gwyer, media relations manager at Halifax. "This makes her more willing to knuckle down to her homework." Nicholas O'Shea, a director of Canterbury-based independent financial adviser Pharon, also recommends being firm with children about money. He has two children, Daniel, 10, and Rebecca, seven, both of whom receive weekly pocket money. "Once the money's gone, it's gone and they don't get any extras," he says, adding that this has helped them to understand the value of money and to learn to budget and save for more expensive things. A savings account can also be useful for encouraging good financial habits. This can be used to teach your child how to find the best deal and to save regularly, as well as more advanced concepts such as how compound interest works. • Secondary school (age 11 to 18) Switching from weekly pocket money to a monthly allowance can be worth considering with older children. "Pay for the essentials, but let them manage their budget over the month," says van den Hende. "If they make a mistake, don't bail them out. It's a lot easier to survive and learn from a budgeting mistake at 16 than at 26." She also recommends involving them more in the household finances. "People do tend to shield children from this, but it's a good way to introduce them to financial products that they will use when they are older," she explains.
 "All that you have is your soul." --Tracy Chapman |
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Erinna1112 Original500© Member  Witty clever title pending
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I believe that children need to *have* money in order to learn to manage it. To this end, my son does not get an allowance - he gets "commission." He is paid for work that he does around the house. Bad idea, you think? You shouldn't pay kids for chores, you say? I disagree. Work equals income - this is the lesson I am teaching. Nobody hands me money every week just because they like me; I have to earn it. So does he. Work equals income. More work equals more income. Life lesson number one. He has a prescribed formula for what he does with the money, as well. He has envelopes, just like I do (I put a budgeted amount in each envelope for food, gifts, clothing, car maintenance, etc. - when the envelope is empty, no more spending in that category till payday, and time to restock the envelopes). He has a Give envelope, a Save envelope and a Spend envelope. Give gets 10%, save gets 40%, spend gets 50%. He has the option of putting some of his "spend" money in the "save" envelope if he likes. The "give" money is usually spent on toys that he puts in the Toys for Tots box at Christmastime. This teaches him to plan ahead, and how to save up for something he wants. He has purchased, on his own, both a Game Boy Advance and then a Nintendo DS, along with assorted games for each. I don't tell him how to spend the money that he is allowed to spend. Unless I have a philosophical objection to what he's going to buy, I let him make his own mistakes with the money. Nothing teaches this lesson better than experience. If he wants to buy a candy bar with the money, he does - and then he has to work some more to get that money back in order to buy whatever it is he's saving for. But, most importantly of all in my opinion, I live what I teach him. I budget - my money is planned for before it's earned. I have a plan for how I am going to allocate every dollar that I acquire in September. Each month he sees me sit down and do the budget - there's no "one-size-fits-all-months" budget; each is different. I stick to the budget. I don't use credit cards. I don't finance roof repairs. I don't get car loans. I'm cash-flowing school. I knew I was on the right track when, at the grocery store the other day, one of those ubiquitous "clipboard people" accosted me. "How would you like to save TEN PERCENT on your groceries today?" I looked at my son. He looked at the woman, and said, "is that a CREDIT CARD????" as if she were offering him a rattlesnake. She nodded, and he said, "Honey, we don't DO that around here!!" I walked away, proud as I could be. That's my boy 
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Marie5656 Forum-Blogger© Original500© Member  Just hanging out
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Not having children of my own, I cannot speak for myself..but I remember my sister in law telling me that when my niece graduated high school, and was going to start a local community college, they got her a "teen" credit card. Had to be "filled" with cash. They gave her first one to her with $300 loaded into it. They said the initial money was a gift..but she would have to pay the bill, and reload it if she wanted more money in it. She was also given a "rule" that unless it was an emergency, she could not charge more on the card if it was over $150, till she paid some of it down. In the 4 years since, she has, by her own admission, become more responsible with spending and budgeting her money. She now is away at school...living on her own, with a regular credit card. She says she has never been late with a payment, and sets her own personal limits.
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Britt Forum-Blogger© Original500© Member Learning Contentment
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Erinna1112 wrote: I knew I was on the right track when, at the grocery store the other day, one of those ubiquitous "clipboard people" accosted me. "How would you like to save TEN PERCENT on your groceries today?" I looked at my son. He looked at the woman, and said, "is that a CREDIT CARD????" as if she were offering him a rattlesnake. She nodded, and he said, "Honey, we don't DO that around here!!" I walked away, proud as I could be.  You rock, Erinna! Hahaha. I'm imagining your son telling off the clerk, ha-ha. PRICELESS. CREDIT CARDS: JUST SAY NO 
"All that you have is your soul." --Tracy Chapman |
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Britt Forum-Blogger© Original500© Member Learning Contentment
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Marie5656 wrote: She says she has never been late with a payment, and sets her own personal limits. Your neice sounds like a savvy consumer. Personally, I am against credit cards - I prefer debit cards as you spend only what you have and accrue no fees or interest charges - but if one must have a credit card, responsible use is important. It is terrific to see young people handling their money wisely. 
"All that you have is your soul." --Tracy Chapman |
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cynicalninja Forum-Blogger© Original500© Member  Happy Heretic
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My daughter is five and has a basic understanding of money, when we go out for a day sightseeing, shopping etc she knows that no means no and it will never become yes. We are about to start giving her pocket money each week so she can understand the importance of "saving" and "if you can't afford it you can't buy it". I own one credit card, I hardly ever use it, when I do I lose sleep even though my credit card company is always pestering me to use it more, NO !. I will spend what I can afford and NOTHING more, a message I am passing on to my daughter, unfortunately if she goes into higher education in England she will inherit a world of debt, but of course in Scotland (Gordon Brown is scottish !, coincidence ?) further education it still free so when Jade gets near University age guess where we are moving to ?
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Marie5656 Forum-Blogger© Original500© Member Just hanging out
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Britt wrote:
Britt, wnem my niece was about 8, and I had her visit for a weekend, I brought her, among other places, to our local dollar store. Gave her a $5 bill and told her she'd be able to get 5 things. Figured I would handle the sales tax. First, she was totally overwhelmed that she could get 5 things. She looked around the store for about a half hour. As for being a sacy consumer, she started early. She found an item that was 2 for a dollar. So she was very proud she ended up with 6 things on this trip. 
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