Money Observer’s Prudent Parent shares the top tips he will be giving his son as part of their ‘money chat’, the personal finance equivalent of the ‘birds and the bees’ talk.
The government has put forward a new 10-year plan to help transform the nation’s financial health by getting more people to save regularly. One of several targets on the table is to increase the number of children receiving financial education at school by two million, to 6.8 million.
While such a move is welcome, the government also needs to tackle the way schools have dealt with financial education since it was introduced into the national curriculum more than five years ago. The vast majority of schools have opted to integrate financial education into lessons on other subjects rather than teach it on its own, treating it as a sideline rather than fully embracing it.
There are some great money educators, as our sister magazine Moneywise has recognised in its personal finance teacher of the year awards, but I think the onus is on parents to do their bit too. Obviously, given that I have been writing about personal finance for a decade, I am relatively well-placed to pass on some wealth wisdom. When the time comes, here are the top tips I will be giving my son as part of our “money chat”, which is essentially the personal finance equivalent of the “birds and the bees” talk, although less awkward for all involved.
Top of the list would be attempting to teach the power of compound interest and how it is a friend of savers and investors, and a foe of borrowers. It’s a tricky concept for adults to understand and appreciate, never mind kids, but one idea I have is to “reward” my son with a “bonus” if he opts to save his pocket money rather than spend it all at once.
Another key message I will pass on to my son is to avoid debt, although not in the case of a student loan (which is a graduate tax) or a mortgage to put a roof over his head. I am thinking more about debts such as personal loans and spending on credit cards – although it is sensible to have one credit card and pay it off each month to boost your credit score and provide a bit of financial flexibility. Learning how to budget, building a rainy-day fund and avoiding leasehold property (I’m speaking from experience here) will also be on Prudent Parent’s syllabus.