It’s an emotional time when children start senior school. Circles of friends may change, the clamour for more independence will start getting even louder as parents have to accept that they’re growing up.
However, rationality still needs to play its part, and one aspect that becomes more pressing is financial literacy. Learning about money can differ depending on where in the UK you are, and what kind of school your kids attend, and it can be spotty.
Fincap.org found that only 4 in 10 young people reported receiving some financial education at school. So alongside inevitably being the Bank of Mum and Dad, it can pay dividends to act also as the Bank (Manager) of Mum and Dad.
Here are a few ideas about how to teach growing kids to keep their bank balances from shrinking.
Many kids will have a piggy bank from a young age, but hitting the teen years can bring new pressures to keep up with the Joneses. Whether via pocket money or earnt money, the concept of having money ‘for later’ is something to establish early. Brits aren’t good at saving generally, with CNBC reporting recently that 90% of us are making inadequate pension contributions. While interest rates continuing to climb is bad news for mortgage borrowers, opening a savings account and encouraging a child to see money increase as a result of investing is putting down good practice for adulthood.
Every generation has moaned that the one following it ‘knows the price of everything and the value of nothing’ since Oscar Wilde first coined the term in Lady Windermere’s Fan. The concept can be taught at a younger age – if Gran has given you £2 then you can buy some sweets that’ll be gone, or we could go to the charity shop and get a book or a game that you’ll be able to keep. As they get older, encourage them to be a savvy shopper. Birthday money and Christmas cash goes further in the January sales for bigger purchases. Do we need the latest (FIFA)game right now when the game shops will be full of second-hand copies in three months time?
Most major banks will now give debit cards to kids with a current account when they hit 11 – the age most go to senior school. However, it has recently been reported that some (fee-paying) cards are available to children as young as 6. As contactless payments – particularly for everyday low-value transactions like buying lunch or paying for the bus – become ever more prevalent, they’re a handy thing to have. They may also be useful in having your kid remember, or be more vigilant about checking how much is in their accounts.
Some caution should be advised, however. Shopping online with a debit card isn’t recommended as there’s no Section 75 protection in the event of something going wrong. If an older teen has a specialist passion that can only be indulged via shopping on the web, you (can) add them as an authorised user to a credit card held by a parent at age 16. This won’t cause any grief to your own credit score, as Upgraded Points notes there’s no separate credit check for an authorised user. However, it also doesn’t give your child a head start on building up a credit score, which can only start at 18 in the UK. And, needless to say, a (big) talk beforehand and a small limit set are good ideas.
As we noted in our article ‘4 Ways You Can Help Your Child Enjoy Senior School’, we’re big fans of letting kids express themselves. A big part of the joy of teenage years is sharing in the development of who they’re going to become. A big part of that is the stable foundation given at home. Helping get them to grips with money management teaches responsibility in an immediately practical and useful way.