As many of my regular readers may know one issue which will ensure I jump on my soap box is the controversial subject of Financial Education.  Therefore my interest was piqued when on Twitter yesterday, @Unbiased_co_uk (The twitter tag behind the excellent www.unbiased.co.uk) asked an interesting question:-

“Who should be responsible for teaching children about personal finance?”

As a financial planner, school governor and a dad to 2 daughters you’d expect it’s a question I’d be interesting in answering…so I did!  I replied with the following:-

“Tough question as I believe it should be both Teachers and Parents in equal measure.”

Whilst I broadly stand by this comment I’ve now given this some more thought and I’m not sure that my initial reaction provided enough of a nuanced response to a relatively complex problem.  I’ve heard it said that the most efficient writers can express their thoughts in a 140 word tweet and if that’s the case the above tweet proves I’m not the most efficient writer!

So, if I was responsible for financial education I’d put into place four clear actions to help both individuals and families manage their money more efficiently:-

1) Start financial education early

I’ve written before about the fact that I believe that financial education should be a key part of the school curriculum.  However I also believe that the earlier children start thinking about how money effects their lives and how good financial habits can make a fundamental impact the better.

I learned to ride a bike early in life and whilst I don’t use this skill often enough it’s one I’ve never forgotten.  I believe that if you teach children financial fundamentals at a primary age and continue to reinforce good financial habits as they become adults it’s surely more likely that they (like me and my bike) will never forget what to do to manage their money more effectively.

2) Make learning about money fun 

My wife, Cassie, works with young children and one of the things she always tells me is that young children ‘learn through play’.  Whilst I appreciate that classroom settings need to be more formal as children get older, I also believe that children will always learn more if they are engaged with a particular subject.

So, how do we ensure that children want to learn about money.  I believe we need to make it fun!  This can be done in a number of ways including interactive tools, online games and role play and there are some fine examples of work going on around the country of how this can be done.

A perfect example of how making a subject fun increases engagement is the TV show “Horrible Histories” which is a kids comedy show with a twist, it is packed full of interesting historical facts.  If you’ve not seen the show you can check out some clips here.  If we could apply the same strategy and make learning about finance interesting and fun I’m sure we have a better chance of the next generation being more financially informed.

3) Work towards ensuring that Parents educate children about the value of money.

I’m a firm believer in ensuring that my children understand the value of money.  I also believe that parents shouldn’t shower their children with gifts for no reason and as parents we should reinforce the understanding that hard work, effort and perseverance should be the key to receiving rewards (financial or otherwise).

One of the things we do in our family is to ensure that Charlotte does not automatically expect to receive a new toy or present but can earn these things through achievement or work.  We also talk to Charlotte about the value of any present she may receive.  As well as this, we talk about the importance of saving and one of Charlotte’s favourite Saturday afternoon activities is counting the money in her piggy bank to see how much she has built up! (I know….she’s a bit like her dad!)

Now, I’m not saying I’ve got all the answers and as a family we could probably do far more to ensure Charlotte and Sophie (when she gets older) understand the value of money.  However I also believe that more parents can take some simple action to ensure that their children understand about the financial value of their lives.

However, what happens if parents manage their finances poorly and what sort of example does this set to their children….which brings me on to my next point:-

4) Provide financial education to parents

So, how do we solve the issue of parents managing their money poorly and passing these poor habits onto their children.  The good financial habits reinforced at school will undoubtedly have less impact if the message at home is contradictory.

I firmly believe that the key to ensuring children have a good financial ‘role model’ at home is to ensure that parents have access to high quality financial education.  Currently their are some fantastic resources available within a couple of mouse clicks which provide great explanations on any aspect of personal finance.  However the issue with this is that the individuals searching for this information tend to be already financially ‘engaged’ and the challenge is to ensure that this education is engaging the ‘un-engaged’ parents in question so that they want to learn how to manage their money efficiently.

How to do this is a challenge.  However I believe that a great start would be to provide easy ways to demystify money in fun and interactive ways.  A couple of years ago I volunteered to run a free session with parents in a children’s centre for a London Borough.  We talked about budget planning, goal setting and researching the savings market.  I tried to ensure that the session was as interactive as possible and I received a fair amount of positive feedback about the content and interactivity.

However I’m sorry to say that whilst I intended to volunteer some time every month to run similar sessions with parents I haven’t done anything with this idea mainly due to time constraints.  It’s a concept I pick up on in the future time permitting.  However potentially with the use of technology there might be a solution which engages more parents and reaches move families than me volunteering in a school once a month!

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As ever I’m open to debate, discussion and your thoughts on these points.  However I’d like to ask you one more question…. If you were in control of ensuring that the UK population were more financially literate what action would you take? I’m looking forward to hearing your thoughts….