Money Management for Children – How young is too young?
Guest post by Elaine Roberts
The British Government recently announced that it will be incorporating compulsory money management into the National Curriculum. This means that children as young as 5 will be learning about personal finances. While many of us can see the benefit of teaching children how to manage their money from a young age, the policy has come under some fierce scrutiny from groups who claim we’re taking childhood innocence from these school pupils.
Nonsense, if you ask me.
The developed world has a massive consumer debt problem and it’s largely because of poor debt management by adults. But is it really surprising. We go to school and it’s deemed a failure by the school system if we are unable to read and write properly. Why? Because these are essential skills for getting on in life. Yet up until now there has been no compulsory money management education. Instead, young people leave at 18 with no prior experience of handling their finances and are thrust into a society where credit is available all too easily. And then we have the audacity to wonder why young people struggle to juggle their money! Handling finances is an absolutely essential skill and I don’t believe that any age is too young if the lessons are made fun.
Take my daughter, for example, who recently turned four. She knows that certain small chores, like helping me to clean up the living room and helping me with tidying up earn her £1. She can look in a catalogue and see how much things cost and find something she would like and ascertain how many times she should help me to be able to treat herself. If, in the meantime, something else comes up she wants, she knows she has to weigh what is most important – the larger treat she is saving up for (which will be longer in the process if she buys a small thing in the meantime) or the smaller thing now. She weighs this effectively and makes a decision knowing what the consequences will be. This is money management – knowing that you can’t buy everything and being able to work out what the priority is.
So with money management for children, how young is too young? Well, if you’re talking spreadsheets, accounts and complex financial data, then yes, 5 is far too young. But for basic concept teaching, made fun, it’s never too early. And perhaps a financially educated generation of young people will go some way to tackling the massive debt problem facing consumers.
What about you? Do you teach your children about money? At what age?
I was raised in a similar way: with a strict allowance and not a dime more.
I do not have children of my own, but my husband and I share the idea that when they come along we will give them a strict allowance and reward them financially for certain extra chores or activities, and then tax the lot.
We will use the tax revenues to pay for school supplies, sporting equipment, etc.
Might as well get them used to it from the start.
I don’t hide money from any of my kids(1,3,10). They see me paying the bills and balancing the checkbook. They hear my wife and I discussing our finances.
The only one getting a “lesson” in finances is my oldest, but the 3 year old asks questions and gets legitimate answers.
“Why do you pay bills, Daddy?”
“So the lights don’t get shut off, sweetheart.”
I think that personal finance should be a mandatory class in every high school! I think elementary school isn’t too young either.
Someone much wiser than me once told me that kids absorb their primary principles and value systems between the ages of 1 and 6. They’re like sponges, and everything learned during this period is very critical to how they react to future situations…
So no, I don’t think 5 is too young…especially if, as you point out, we’re not teaching them spreadsheets, but the principles they need to succeed financially later in life.
My kids also have a strict allowance and they are really starting to understand the value of money. They will weigh up the value of different purchases and it’s interesting to see how often they will choose not to buy something they asked me to buy for them when I say no. Unit pricing on groceries has just come in here (in Australia) and they are developing a good understanding of the differences between brands and packaging options – and seem to appreciate that I won’t pay $40 a kilo for chocolate just because there’s a princess picture on the foil wrapper!
I agree that schools should be teaching basic financial skills beginning at an early age. It would better prepare our kids to be financially savvy adults.
I think teaching personal finance in school is especially important for for those children coming from poorer families. Part of the reason these people are poor is they simply have never been taught any personal finance, so they obviously cannot teach their own children, and the vicious cycle continues. Children from wealthier families will, in all liklihood, have these lessons taught regardless of what goes on in school.
Just to clarify, I still think it is important for everybody to learn personal finance in school. Just likly more benefit for the poorer folks.
I am in agreement with you: starting children off with learning how to manage their finances early is an excellent idea. For one, if people learned early the mistakes to avoid, perhaps it would prevent them from having to experience debt management issues as adults. There are many programs that offer money management skills for young children that are both educational and fun. The best part is that many of them are offered free and can be used in a home setting with the parents as the teachers.