Because most schools aren’t teaching finance, the responsibility falls to parents. But many parents are reluctant to broach the subject, often because they don’t feel qualified or they think talking about money will make their children worry. In a recent study 72% of parents reported at least some reluctance talking to their kids about finance. But that doesn’t mean they don’t want their kids learning it — 91% believe it’s appropriate for kids to learn about financial matters in school and 75% said there should be a personal finance requirement to graduate.
“The practicality of teaching [finance to kids] is so important…it’s the one topic that they’ll actually use for the rest of their lives, every day. But it’s the one topic that isn’t really taught,” says Gregg Murset, chief executive of My Job Chart, an online tool that teaches kids about responsibility, managing money and helping charities.
The following is a list of financial terms and concepts that experts say every kid should learn.
It all started in the Kingdom of Lydia (part of modern day Turkey) around 2.650 years ago.
Credit cards are the best thing that ever happened for people who want to buy things they cannot immediately afford, yet credit cards are also the worst thing for the same people because they can easily put you in debt.
Bank and Saving
Piggy Banks are not always piggies. They can be elephants, pirate ships, toy houses or even pretend bars of gold. So why are they called piggy banks? The word ‘piggy’ comes from a brownish-red clay called ‘pygg’ which was used in the Middle Ages in Britain to make pots. Money was kept safe in pots made from pygg clay and the words pygg and pig got mixed up and the name stuck.
Micawber’s famous phrases: “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”
Investing, shares and charity
Imagine you decide to start a business selling homemade ice cream. First you have to make the ice cream and this requires money for the ingredients. Then you need to put the ice cream into something, a cornet or a tub and have little spoons to eat it. They also cost money. Posters, flyers and price lists for your new ice-cream business also cost money. Unfortunately, you don’t have any. So what do you do? You ask someone to ‘invest’ some money in your business. Your dad might agree to lend you 100 pounds (or dollars) which you would not have to repay, as long as for every ice cream you sold, you shared part of your profit with him.
Planning for the future
In 1970, psychologists Walter Mischel and Ebbe Ebbesen carried out a clever experiment at Stanford University in America. The experiment, which became known as the Marshmallow Test, involved young children (aged four to six) being shown a marshmallow (or a cookie or pretzel) on a table. Each child was told they could eat the sweet immediately or, if they waited 15 minutes while the researcher was out of the room, they could have two marshmallows when the tester returned.
Pocket money is one of the first ways children can learn the basics of managing money. But how much pocket money you give, when you give it, and whether you give it at all depend on your family circumstances and values.