Teaching children about money is about as impossible for most parents as teaching them about sex. In fact most grown-ups I suspect hide their banks statements from their kids with every bit as much care as they would hide a packet of condoms. Our own money is personal, it exposes frailties, status and inadequacies too sharply for much discussion. Yet in this information age, children are learning about money with the same voracity as they learn about sex. Which can discomforting when they start asking questions on economics we don?t understand.
The buzz phrase, Financial Capability has become fashionable lately. While most of us left school with only the haziest notion of how to run a current account, the Government is to educate the young about money ? if only for save the State having to support the improvident. And thus the Financial Services Authority has recently announced a major new plan to integrate financial education for children from five upwards in the revised national curriculum from September 2000. Scotland is even more up to speed. Last week the consultation period ended for the paper on Education for Financial Capability being prepared by the Scottish Consultative Council on the Curriculum, sponsored by the Royal Bank of Scotland, which will make recommendations to Scottish Ministers. Some materials are expected to be in schools next year with the rest ensconced in the curriculum by 2000. If only half their recommendations are accepted, stand by for a new generation of Scottish Warren Buffets.
The SCCC faxed me the targets. By the age of 7 most children will have discussed why money is needed and explained why people are paid and have decided on the best way to use their money (still a mystery to most mummies and daddies.) By 9 they will prepare simple budgets and decide on different savings accounts and compare different standards of living. By 13, children will calculate gross and net pay, investigating cash flow and balance sheets, and explain the effect of taxation on earned income, and by 18 they will be using the Internet to access information on investment and discussing ethical investment, sustainable growth and preparing reports on different types of borrowing. By which time one imagines they will be ready to take over from running any Bank in the country.
Impressive stuff. Clearly there is role for financial institutions to play, if only to make up the shortfall in state funding. It is absurd to object, as some have, on the grounds that they have a vested interest. The private sector should be encouraged to invest and anyway children pick up very quickly when they are being schmoozed. But the limitations must be recognised. This information will tend to be product driven Children will discuss credit cards, mortgages, pensions, savings accounts etc. and why they should have them, but not necessarily why they should not have them. The other challenge is that teachers are supposed to do the teaching. They are not only already overloaded, but, given teaching has reasonable job security and pensions the rest of us would kill for, they do not have the experience of portfolio careers, unemployment and pension challenges their pupils will face.
There is also that M word we?re all so scared of. Morality. Learning about money?s tools is useful, just as teaching children about the various pros and cons about condoms and the Pill can come in handy, but it does not inform our behaviour. Without morality there is no protection for children against peer pressure and unscrupulous older people or dare I say it, financial institutions. This one must be down to parents however we much we wriggle and we have to live our good example too, for children never learn by ?do as I say?.
Money must be taught holistically as part of developing high personal standards. Personally I do believe that financial behaviour, like sexual behaviour, is linked to personal self-esteem. Psychotherapists will tell you that sexual promiscuity is often a sign of low self worth. The financial equivalent is surely depressive spending and the cycle of the debt junkie. Conversely, there is nothing which makes you walk as tall as having savings and feeling in control of your finances. How difficult it is for us parents to teach all this self-discipline when we have a hard enough time getting through the month and are ourselves, the products of our own upbringing and insecurities. But we have to try, somehow. And harder than ever, for money is increasingly unreal. Whereas our parents or grandparents took us shopping locally where coins were counted out on the counter and even wrote down what was spent each day in big housekeeping books, now we scoot round supermarkets paying invisibly by plastic, or shop on the Internet at the touch of a mouse.
How can we get the balance right? Yesterday I overheard my six year old daughter giving a stern financial lecture to her latest Barbie doll (bought by Daddy, a far softer touch than Mum ). ? Now, no more dresses! They cost a lot of money. You have to have learn to budge it.? She had, I noticed, dropped her Scottish accent and was now mimicking her mother?s London vowels. I crept downstairs. Knowing Barbie, she will no doubt wait for Ken to come back from work and budge him. Another useful financial lesson my daughter has already learnt, which school may not cover.
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