It's a simple enough exercise to set up a spreadsheet showing how banks work over say a 12 month cycle, how they take deposits and lend them charging compound interest but only pay simple interest (if anything at all) back to their depositors - It's amazing when you can see a business model set-up with variables, then play with it to find out what happens - eg for every £100 they get in deposits how much can they lend.
Spreadsheets are also useful aids to teach budgeting setting up a 13 period or 12 Income - Expenditure Forecast get the kids to find out what electricity costs, council tax, food ect then enter in the and income - there are great websites out there with information about wages and calculating the net income after Tax - my biggest mistake when buying my first house and getting married was not realising just how many people would have their hands in my pocket and how no-one conveniently managed to bill me at the same time I got paid. Failing to budget is I reckon the biggest cause of getting into debt - it's a nightmare with so many variables to watch.
Break even points - say working out how a mortgage is calculated then creating a payment table (spreadsheet) and seeing when the payments start paying more capital than interest - also mapping the anticipated rise in value against total aggregate payments - show how investments work!
I'm so pleased this has at last been recognised as a key life skill that should be taught in schools. I feel I left school knowing very little about the real world.
Basic budgeting advice could help prevent students from getting into debt at college/university and taking out credit cards as soon as they are old enough. Understanding a simple balance sheet, learning about fixed and variable costs and how to live off a set monthly budget could be invaluable to young people, especially if preparing to go to university etc.
Maybe there's a need for a Money Saving Expert.com version specifically for teenagers (and their teachers!), full of fact sheets and template downloads etc?
We should also include depreciation in the pack. It's no good just talking about how much you will pay in interest for that new car if the children don't also understand how little it will be worth in 3 years time when the last payment is made. Purchase price plus interest on a credit agreement minus depreciation is the overall true cost of all consumer goods. Most adults don't seem to realise this either!
Great site, thanks for the opportunity to post. Regards Frances
My children are still young, but they have an idea of the value and worth of money and saving, as, to be blunt, we've had to instill it through neccessity (as my sig indicates, whilst we knew the theory, we haven't always put it into practice ourselves, and I don't intend my children to end up in the same situation).
We started with the basics as soon as they could ask and understand - ie, x toy is cheaper in the other shop, if we don't buy the sweets at the till today, by the weekend you'll be able to afford a comic, (and as they get older 'but a Mr Man book costs the same as the comic and will last longer'), that sort of thing.
When we got rid of the Sky tv a few months back, we brought it up a notch - ie, 3 months without NickJr is worth a trip to the Nene Valley Railway - amazing how they can suddenly live without the TV
And at 8, 6 and 3.5, they are all, in their own way, adept at shopping around - yellow labels in the supermarket, the internet to find the best place to get the most from their birthday money (a proportion of which they also know goes in the bank) etc.
They also have had spending money (only £1 or so) from early on, and on days out have their own wallet with their own money, which has given them some responsibility, helped coin recognition, and helped them understand why the 'pound shop' toy on the eye level shelf with the £10 price tag isn't going to happen, but that a, b and c are all in their budget.
These are all things that, in my opinion, this age group should be learning.
I would hope that as they get older, this can all be backed up with more in depth aspects that will prepare them for going it alone, such as basic bookeeping (it was done in General Studies when I was at school 20 years :eek: ago, and it has been useful over the years), how to understand APRs etc, tax and NI and so on.
According to a recent school newsletter, they are having a Financial Awareness week in January - I don't know if it's national or just this school, but it's a good sign, and will be interesting to see what they do.
DFW Nerd no. 884 - Proud to [strike]be dealing with[/strike] have dealt with my debts
When my son asked for a £60 pair of trainers (& answered my first response that it was a lot of money & I couldn't afford with a 'no, it's not a lot of money, some pairs are over £100!) I tried to explain that money was not limitless this way (as well as testing his mental arithmetic!):
If an average person brings home £300 (e.g.) a week for 5 days work, how much do they earn a day?
He said £60. So, that's a whole day's work for one pair of trainers. When you also have to pay for mortgage / rent, bills, food, travel & other essentials, did he still think that £60 was not a lot of money.
At 9 years old, he got the message.
Now, we calculate the cost of many things by 'how many hours / days' someone (mum / dad) has to work to pay for it. And he thinks twice.
When I became divorced I sat my children down and explained to them the family's income and expenditure. Then they could see what disposable income was left each month and understood why I had to say "no" when they asked me to buy something that wasn't necessary or why they couldn't have designer label clothing and trainers. They understood perfectly and have not used pester power since.
I love some oft hese ideas. We taught something like this a few years ago and one thing it highlighted was how our own opinions came in to play. I have had trouble with debt and so was ready to warn of the dangers of credit, but a younger teacher was all for it.
We found that the students needed to understand what money is worth. We began with a figure of the board of £1500. We asked them to write down all the things they would buy in a month. We then deduct tax and NI which leads to a discussion/explanation. We then go through all the other expenses (using CCCS budget sheet as a guide). This gives them a great idea about what you can do with the money you have. We then discuss how easy it is to get in trouble but look at what an extra payment like a CC would do to your monthly expense. We also ask for estimate on how long to pay back a debt. The next lesson is all about this and unexpected changes to income eg maternity leave etc. They do seem to find it very interesting, but sometimes staff need as much teaching!
Teenagers need to see the reality not the theory. It is also interesting to look at how much a month they might get on benefits. A number of my students began to see working as a better option!
In principle it's a great idea as I had no 'financial education' (left Secondary in '97).
Cue the moaning teacher...
I'm a Primary School teacher and we can barely get anything done as it is - more and more is being packed in and nothing is being taken out, e.g. this year it was Modern Foreign Languages.
Could Martin possibly remind Mr Balls (how unfortunate) that there isn't limitless time in a Primary classroom an that eventually something will have to give!
I totally agree! Although it's important to teach the children about money (and we do try to make it as real as possible in maths) who better placed (in most instances) to take their children to the supermarket - than parents! A school trip to the supermarket for rural schools may be seen as a waste of money. Parents take them every week, what better way? It seems more and more that schools are being asked to take on the role of parents, which takes up time we could be teaching the subjects we have actually been trained to do.
Fantastic you have the audience with the minister. Perhaps you might want to start with asking why does our education system only produce 50% of students who attain Maths at grade GCSE C or above (ad English come to that). If they started getting better results in school for the basic subjects may be they would have better sense when it comes to every day activities like finances.
It has always baffled me that people aren't taught this, not so much at school but at home. As I've moved into the adult world (I'm 25 now - eek!) and started earning my own full-time wage and read some of the stories on here I've come to understand just how lucky I've been to grow up in a household where I've naturally learned about money. It probably helped that my mum worked for a high street bank before I was born and went back to work there when I started school, so just from general conversation around the house about what mum did I learned about banks and what went on there.
I learned about money, different coins etc, from a very young age. I can remember being very small and loving being given the task of sorting out the coin jar (my mum's copper and 5p/10p coin jar) then taking the bags of coins to the bank to exchange for notes which were used as our holiday spending money!
I learned a lot from my saturday job in another high street bank when I was 17 - when you're being told you have to push particular customers towards seeing the "financial advisers" (there's a misnomer) in your branch, you very quickly learn why, and what's in it for the bank!
Role play must be a good way to teach children and teenagers about money. In terms of what I think they need to learn probably one of the key points must be about the different kinds of debt. I can partly understand why, as when you've been a victim of debt it must be scary, but it often bothers me on this site about the way so many people see all debt as bad debt. I took the maximum student loan available to me and put a lot of it in an ISA - it paid for my first car after I graduated, which was so much cheaper than if I'd taken out finance for the car! Yet so many people see student loan as bad debt, and this puts off teens from going to uni, but in reality it's the cheapest loan you'll ever get!
I am a primary teacher and a parent, so feel the need to get on my soap box for a moment...
I think our primary aged children (especially in the largely deprived area in which I teach) need to be taught about budgeting. How on earth to make this exciting, but I know most of these children would have no idea because they have no role model to copy. For me the aim to teach them that to borrow COSTS...no quick win, no easy way through. You just end up paying more for whatever it is you buy. You borrow £200 for your Wii from a local loan shark, and you end up paying over £600 back over the next 12 months. It just doesn't make sense.
I am also shocked by how few of these 7-11 year olds do not know how to cook and do not cook at home. I think the whole budget idea needs to include what was called in my day Home Economics, e.g. how to make you money go further in the home by buying food sensibly and using all of it up.
I bring these topics into everyday conversations as much as possible. There are lots of opportunities throughout the curriculum if you look for them. History is great as we talk about World War Two and rationing. Maths is obvious and a quick trip around our local supermarket explaining how "buy one get one free" just costs the farmer and makes the retailer money, is always lovely to do - you can see the scales fall from their eyes. PSHE is also a good link because you can talk about fair trade and responsible purchasing and climate change through irresponsible importing. And ofcourse Geography, in terms of how our local farming community has been decimated by small green grocers etc. being wiped out by the huge supermarkets, how our enitre local economy is affected and now there are few jobs in an area that was once self -sustaining.
Replies
Spreadsheets are also useful aids to teach budgeting setting up a 13 period or 12 Income - Expenditure Forecast get the kids to find out what electricity costs, council tax, food ect then enter in the and income - there are great websites out there with information about wages and calculating the net income after Tax - my biggest mistake when buying my first house and getting married was not realising just how many people would have their hands in my pocket and how no-one conveniently managed to bill me at the same time I got paid. Failing to budget is I reckon the biggest cause of getting into debt - it's a nightmare with so many variables to watch.
Break even points - say working out how a mortgage is calculated then creating a payment table (spreadsheet) and seeing when the payments start paying more capital than interest - also mapping the anticipated rise in value against total aggregate payments - show how investments work!
hope this is of some help?
Basic budgeting advice could help prevent students from getting into debt at college/university and taking out credit cards as soon as they are old enough. Understanding a simple balance sheet, learning about fixed and variable costs and how to live off a set monthly budget could be invaluable to young people, especially if preparing to go to university etc.
Maybe there's a need for a Money Saving Expert.com version specifically for teenagers (and their teachers!), full of fact sheets and template downloads etc?
Great site, thanks for the opportunity to post. Regards Frances
We started with the basics as soon as they could ask and understand - ie, x toy is cheaper in the other shop, if we don't buy the sweets at the till today, by the weekend you'll be able to afford a comic, (and as they get older 'but a Mr Man book costs the same as the comic and will last longer'), that sort of thing.
When we got rid of the Sky tv a few months back, we brought it up a notch - ie, 3 months without NickJr is worth a trip to the Nene Valley Railway - amazing how they can suddenly live without the TV
And at 8, 6 and 3.5, they are all, in their own way, adept at shopping around - yellow labels in the supermarket, the internet to find the best place to get the most from their birthday money (a proportion of which they also know goes in the bank) etc.
They also have had spending money (only £1 or so) from early on, and on days out have their own wallet with their own money, which has given them some responsibility, helped coin recognition, and helped them understand why the 'pound shop' toy on the eye level shelf with the £10 price tag isn't going to happen, but that a, b and c are all in their budget.
These are all things that, in my opinion, this age group should be learning.
I would hope that as they get older, this can all be backed up with more in depth aspects that will prepare them for going it alone, such as basic bookeeping (it was done in General Studies when I was at school 20 years :eek: ago, and it has been useful over the years), how to understand APRs etc, tax and NI and so on.
According to a recent school newsletter, they are having a Financial Awareness week in January - I don't know if it's national or just this school, but it's a good sign, and will be interesting to see what they do.
We found that the students needed to understand what money is worth. We began with a figure of the board of £1500. We asked them to write down all the things they would buy in a month. We then deduct tax and NI which leads to a discussion/explanation. We then go through all the other expenses (using CCCS budget sheet as a guide). This gives them a great idea about what you can do with the money you have. We then discuss how easy it is to get in trouble but look at what an extra payment like a CC would do to your monthly expense. We also ask for estimate on how long to pay back a debt. The next lesson is all about this and unexpected changes to income eg maternity leave etc. They do seem to find it very interesting, but sometimes staff need as much teaching!
Teenagers need to see the reality not the theory. It is also interesting to look at how much a month they might get on benefits. A number of my students began to see working as a better option!
I learned about money, different coins etc, from a very young age. I can remember being very small and loving being given the task of sorting out the coin jar (my mum's copper and 5p/10p coin jar) then taking the bags of coins to the bank to exchange for notes which were used as our holiday spending money!
I learned a lot from my saturday job in another high street bank when I was 17 - when you're being told you have to push particular customers towards seeing the "financial advisers" (there's a misnomer) in your branch, you very quickly learn why, and what's in it for the bank!
Role play must be a good way to teach children and teenagers about money. In terms of what I think they need to learn probably one of the key points must be about the different kinds of debt. I can partly understand why, as when you've been a victim of debt it must be scary, but it often bothers me on this site about the way so many people see all debt as bad debt. I took the maximum student loan available to me and put a lot of it in an ISA - it paid for my first car after I graduated, which was so much cheaper than if I'd taken out finance for the car! Yet so many people see student loan as bad debt, and this puts off teens from going to uni, but in reality it's the cheapest loan you'll ever get!
I think our primary aged children (especially in the largely deprived area in which I teach) need to be taught about budgeting. How on earth to make this exciting, but I know most of these children would have no idea because they have no role model to copy. For me the aim to teach them that to borrow COSTS...no quick win, no easy way through. You just end up paying more for whatever it is you buy. You borrow £200 for your Wii from a local loan shark, and you end up paying over £600 back over the next 12 months. It just doesn't make sense.
I am also shocked by how few of these 7-11 year olds do not know how to cook and do not cook at home. I think the whole budget idea needs to include what was called in my day Home Economics, e.g. how to make you money go further in the home by buying food sensibly and using all of it up.
I bring these topics into everyday conversations as much as possible. There are lots of opportunities throughout the curriculum if you look for them. History is great as we talk about World War Two and rationing. Maths is obvious and a quick trip around our local supermarket explaining how "buy one get one free" just costs the farmer and makes the retailer money, is always lovely to do - you can see the scales fall from their eyes. PSHE is also a good link because you can talk about fair trade and responsible purchasing and climate change through irresponsible importing. And ofcourse Geography, in terms of how our local farming community has been decimated by small green grocers etc. being wiped out by the huge supermarkets, how our enitre local economy is affected and now there are few jobs in an area that was once self -sustaining.
Need I say more?