Teaching Young People About Money

The earlier children, teenagers, students and young adults learn these life lessons, the richer they'll become!

There are almost twelve million dependent children in England and Wales, according the Office for National Statistics (ONS). What's more, almost 670,000 children were born in England & Wales in 2006, which was the highest number of births since 1993. To put these figures into context, there are more under-eighteens in England & Wales than there are people in medium-sized European states such as Belgium, Greece, Portugal or Sweden. That's a lot of youngsters!

Naturally, it's our job as adults to teach good money management to the younger generation, whether they be children, teenagers, students or young adults. However, many parents, teachers and other mentors feel unprepared and badly equipped to teach these vital life lessons to youngsters. However, the government has announced that lessons in personal finance will become a core feature of the secondary-school curriculum from next year.

However, we at the Fool believe that it's never too early to set young people on the path to financial enlightenment, so here are eight simple lessons to pass on to your young friends:

1. Budgeting

Budgeting is the cornerstone of good financial management. To cut a long story short, your financial life will always be a mess if you don't learn how to balance your income and your outgoings. If you don't know this already, then learn how to budget today.

2. Spending

In a culture obsessed with material possessions, conspicuous consumption and celebrities, it's all too easy to have Champagne tastes and a beer income. As well as learning how to live below your means, it's worth steering clear of impulse buying, because convenience costs. It's far wiser to shop around and learn how to haggle in order to cut the cost of everything that you buy.

3. Borrowing

Thanks to the ever-rising costs of university education, an entire generation is growing up with a massive debt burden. Teach your kids that borrowing to invest (in your education, in a home, or in a business) is a great idea, but borrowing purely to subsidise your lifestyle is plain daft. Learn more in our Get Out of Debt centre.

4. Saving

After budgeting, the next financial skill to acquire is the ability to save regularly. Putting aside some spare cash each month not only breeds financial discipline, but it also helps to build a cash cushion to lessen the unexpected knocks which life delivers. Here's our Ultimate Guide to Saving.

5. Insurance

Just as saving helps you to strengthen your financial security, so insurance helps to ward off the worst that life has to offer. So, make sure that your protect yourself, your family, your earning power and your prized possessions by having sufficient car, home, life, health and travel insurance. If not, you could fall victim to outrageous fortune!

6. Investing

Saving is good for creating an emergency fund or rainy-day pot, but if you want to build a big nest egg, then you need to invest -- preferably in property or the stock market. For example, by saving a tenth of your pre-tax income for your working life, you could create a lump sum which exceeds your lifetime earnings from work. Here's how to become an automatic millionaire.

7. Pensions

After four or five decades of work, you could retire in your sixties or seventies and still live for another twenty or thirty years. Surviving for decades without an earned income is difficult, to say the least, so start saving for retirement early and save hard. By beginning your pension contributions as soon as you start work (or even before) and keeping them up until you decide to stop work, you should be able to enjoy a secure retirement. Otherwise, you face day centres and despair instead of cruises and comfort!

8. Scams

Finally, you need to understand that there are millions of people out there just waiting to relieve you of your hard-earned cash, whether by fair means or foul. So, learn to spot scams, rip-offs and swindles, including these tricks: Steer Clear Of These Scams, Five More Scams To Shun and Scams: The Next Chapter.

Here's hoping that you soon make money your servant, instead of your master!

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