Financial education is increasingly important, and not just for grown-ups but also for students. It is becoming essential for the average family trying to decide how to balance its budget, buy a home, fund the children’s education and ensure an income when the parents retire. Of course people have always been responsible for managing their own finances on a day to day basis – spend on a holiday or save for new furniture; how much to put aside for a child’s education or to set them up in life – but recent developments have made financial education and awareness increasingly important for financial well-being. For one thing, the growing sophistication of financial markets means consumers are not just choosing between interest rates on two different bank loans or savings plans, but are rather being offered a variety of complex financial instruments for borrowing and saving, with a large range of options.
It is very important for our students to develop their financial skills not only by studying mathematical problems or discussing economic situations in school. So, the question: How can I help my child as a parent?
Becoming financially capable involves much more than the development of mathematical skills such as coin recognition and calculating the percentage decrease of a price. It encompasses three interrelated themes:
- Financial Knowledge and Understanding – this is about helping children to understand the concept of money. This means gaining knowledge and understanding of the nature of money and insight into its functions and uses. Desired Outcomes:
• The skills required to deal with everyday financial issues.
• The ability to make informed decisions and choices about personal finances.
- Financial Skills and Competences – this is about helping children to deal with day-to-day money management issues and to begin thinking about planning for the future. This means being able to apply knowledge and understanding of financial matters across a range of contexts, including: personal situations and situations beyond our immediate control. Desired Outcomes:
• The ability to identify and tackle problems or issues with confidence.
• The ability to manage financial situations effectively and efficiently.
- Financial Responsibility – this is about raising children’s awareness of the wider impact of money and personal financial decisions, not only on their own future, but on their family and community. This means understanding how financial decisions can impact not only on the decision-maker, but also on their family and community. Desired Outcomes:
• The awareness that financial decisions and actions are closely linked with value judgements (social, moral, aesthetic, cultural and environmental as well as economic) and therefore have social and ethical dimensions.
Money is mentioned explicitly in the current National Curriculum frameworks for PSHE and citizenship, and the mathematics programmes of study for key stages 1 and 2. In the new English Primary curriculum (implemented in 2011) money, as a concept, features within both the understanding of physical health and wellbeing and in understanding mathematical areas of learning. Many other opportunities to use money as a context for learning also exist.
Below is a list with financial key words that should be in your child’s vocabulary – please use the list as a starting point for discussions:
In conclusion, financial education is important because true freedom and independence requires financial intelligence. The world is littered with people who built vast fortunes and lost it all because of their own financial ignorance. Lacking financial intelligence is the opposite of financial security – no matter how much money you have. Choosing the path of financial intelligence, where you learn to make decisions independent of other people’s advice, leads to investment wisdom. This allows you to independently sort all the divergent opinions with confidence and decide what’s uniquely true for you, your future and that of your children.