Fight Your Child's Fear Of Finance

With one in five children afraid for their financial future, Laura Starkey asks what children know about money and how we can help them learn more.

A few years ago, I worked as a secondary school teacher -- and, during my short time in the profession, it became very clear to me that children are (to put it politely) complex creatures. While it never surprised me a number of pupils were reluctant to listen to me rant about Of Mice and Men, I was sometimes shocked to hear a student repeat a political point they'd heard on the news... Or some snippet of juicy gossip they'd sneakily heard outside the staff-room! The point is, although parents and teachers bemoan the fact that young people 'never listen', children often pick up far more than we assume. And in this increasingly troubled economic climate, some of the things they overhear are causing distress. Poverty And Panic In The Playground According to research from Abbey, 21% of 11-15 year olds are frightened of getting into debt and being poor when they get older. Conversely, just 15% of the children surveyed said they were worried about falling out with their friends. Some even stated unease about the affordability of housing in Britain, and said they wonder how they will be able to afford to set foot on the property ladder when their time comes around. I think this is a pretty shocking study, which highlights the fact that many young people share adult concerns about money. While we might assume that they're daydreaming about kids' stuff, some children as young as 11 are trying to get their heads around managing money. Fighting Financial 'Illiteracy' In my opinion, Abbey's study throws into sharp focus the inadequacy of our provision for personal finance education in the UK. At the moment, there is no statutory requirement for personal finance to be taught in schools. So, while lessons on Shakespeare, sex and citizenship are mandatory, lessons on how to spend and save wisely are not. While many young people recognise they have a vested interest in understanding money, they're often short-changed when it comes to information. According to debt charity Credit Action, an alarming 15% of 15-24 year olds researched in 2006 thought an ISA was an iPod accessory -- and one in ten believed it was an energy drink. Elsewhere, new research by Nationwide has found two-thirds of teenagers do not believe they have a good knowledge of finance, and one in five believe debt is not a bad thing! So perhaps it's not surprising the Consumer Credit Counselling Service is seeing more under-30s turn to bankruptcy than ever before. While the government has suggested a cross-curricular approach to studying money should be rolled out in UK schools, there is little certainty about how and when this will happen. The ifs School of Finance -- the only provider of GSCE, AS and A level equivalent qualifications in personal finance -- also argue a focussed and specialist approach to the subject is the best way to make a positive difference to children's learning about the subject. However, the government seems reluctant to listen. What Can We Do? Apart from lobbying Parliament, there are things we can all do to help the young people in our lives. Firstly, I'd suggest being as open as possible about money at home. I think Abbey's study shows excluding youngsters from conversations about economic issues doesn't necessarily stop them from worrying. In fact, it can achieve the opposite effect. Discussing some of the financial implications of moving house, talking about savings and pensions and explaining more complex concepts (for example, compound interest) will be rewarding for both you and your children. Secondly, I think encouraging your children to take responsibility for their spending is a great idea. Once they reach a certain age, giving children an allowance and showing them how to get the best deals on the things they want will teach them the power of their own financial choices. And, if you can, open a good savings and/or current account for your child and show them how to use it wisely. Thirdly, (another pearl of `wisdom' from my teaching days) I think praise can be a powerful thing. When you see that a child has shopped or saved wisely, don't forget to tell them you're impressed -- and when they ask you a question, do your best to answer it. Reinforcing good financial behaviour in children is probably a more effective way to promote it than simply telling them what they should do. Finally, the most important thing you can do as a parent or guardian is to act as a good role model. Lead by example, and if you've made money mistakes in the past, consider admitting to them and explaining what you learnt. Perhaps this way, we stand a fighting chance of helping our children de-stress about debt, and learn more about money. More: Listen to the Money Talk Podcast: Teaching Teens Why Money Matters | Ace Accounts For Young Savers | Boost Your Child's Savings Pot