You're Never Too Young to Learn Facts of Finance; the Debate over Financial Education and the Lack of It Is Hotting Up. So When Is the Right Time to Start Teaching a Child the Value of Cash? Vicky Shaw Investigates
Byline: Vicky Shaw
WITH university fees placing young people in debt early in life and the growth in expensive payday loans, the next generation needs to understand its APRs just as well as its ABCs.
But new research has revealed a worrying lack of skills among many teenagers and young adults when it comes to managing their money.
The study found that more than two-fifths of 14 to 25-year-olds were unable to recognise the letters "CR" on a bank statement as meaning that a balance was in credit.
In another warning sign for the nation's future finances, more than a quarter of young people did not know that it would be better to opt for a lower APR (annual percentage rate) than a higher one when taking out a credit card or a loan, according to the report by Barclays and charity pfeg (Personal Finance Education Group).
Successive governments have been trying to encourage more youngsters into a lifetime savings habit, with the introduction of Child Trust Funds and, more recently, Junior Isas.
So how old should children be when we start arming them with the skills they will need to navigate the world of finance? It could be much earlier than many of us think.
The Government recently announced that financial education will become compulsory in English secondary schools from next year, a move that will bring the country in line with the rest of the UK.
However, there are growing calls for politicians to go much further by giving children better financial know-how from primary school level onwards.
Recent research published by the Money Advice Service, an independent body set up by Government, found that youngsters have already formed their money-management skills by the age of seven.
Behaviour experts at Cambridge University, who compiled the report, said most seven-year-olds have already grasped how to count out money and know that it is used to buy goods. They have also worked out what it means to earn money, what an income is and how to plan ahead.
Children were found to pick up many of their financial habits by copying their parents' behaviour - both good and bad.
So if you're a mother or father of a young child then be warned: you need to add "bad money management" to the list of things not to do in front of the kids.
Showing a child how to handle their money is a fundamental life skill, as important in its way as teaching them to read and write. …