Teaching young people how money works and how to make it work for them; transforming financial futures from hoping for the best to knowing what to do
Rob Gardner is the Director of Investment Management for St. James’s Place Wealth Management and has dedicated much of his career to instilling financial education in young people, specifically since he became a father. In 2012, Rob founded RedSTART, which aims to improve the financial literacy of young people, aspiring to educate one million young people to budget, save, invest and give back.
To help with this, he has written a children’s book called Save Your Acorns and created a card game called Silly Monkeys based on the book as a means of building financial literacy in the next generation of UK savers. Rob also chairs the Children’s Financial Education Policy Council in the UK.
Below he shares his tips in how best to teach children about money and we have collated some financial education resources to help you out.
Top tips on teaching financial education to children
Financial education is one of the most important lessons to teach children and the current climate provides an excellent opportunity to start the conversation. I am a firm believer that all young people should have access to financial education, taught by both parents and teachers, and believe that it is an excellent opportunity to set the foundations for actions that will last long into the future.
Therefore, I have put together a list of top tips and advice for parents who are looking to educate young people about finance and make them aware of the advantages of budgeting, saving, investing and giving back. This is a life skill that, I believe, needs to be taught early on in order for them to know what to do, how money works and ultimately how to plan their financial future.
1. Start investing early
Taking small steps by investing little and often from an early age can make a dramatic difference to a young person’s future, giving them a head start towards financial security. For example, investing £5 a day, into a pension, up to the age of 10 can lead to a £1m+ investment by the age of 65*, taking compound growth into account. Or, a smaller amount of 50p a day could return £100,000 over the same period. The important thing is to start investing as soon as you can so that your money has plenty of time to grow.
* Assumes an annual growth rate of 7% net of charges. This figure is an example only and is not guaranteed. What you get back depends on how your investment grows and the tax treatment of the investment. You could get back more or less than this.
2. Make learning fun
It’s a stressful time for parents, many of whom are juggling home-schooling – often for the first time – with work and managing the household. However, there are a number of fun, quick and simple ways to start teaching children about money.
Virtual games-based lessons are often free and can include everything from budgeting and saving, to risk and reward, the basics of investing and how interest works. These programmes can help young people be better equipped to make smart financial decisions when they are older.
3. Lead by example
Ensuring people have the ability to plan, grow and protect their financial future and achieve financial wellbeing in a world worth living in is so important. It is equally as important to be able to share and teach these skills to our children, so they can grow up with a sense of confidence towards money and know how to make informed decisions throughout their lifetime.
Educating young people about the advantages of budgeting, saving, investing and giving back is a life skill that needs to be taught early on. In doing so, we can all take a moment to consider whether we are leading by example with our own finances and, if not, see where the opportunities are to make adjustments.
4. Increased emotional and financial support
It’s likely that your children will need extra support during these unprecedented times, whether they are young and home from school, or older and back from university. Thinking about money as a family is a great place to start and has the added benefit of introducing younger generations to financial planning. The impact of coronavirus can prompt us to teach young people important life skills such as how to adapt to current circumstances and avoid financial strain, while still saving for the future.
5. Set a goal
Whether it’s buying a first home, paying for further education or travelling the world, setting a goal and putting money away to save for this early on in life can make it achievable. The longer the investment has, the greater the benefit will be from potential year-on-year compound growth of reinvested returns. For example, investing £200 a month into an ISA for five years can grow to over £13,000*.
* Assumes an annual growth rate of 5% net of charges. This figure is an example only and is not guaranteed. What you get back depends on how your investment grows and the tax treatment of the investment. You could get back more or less than this.
It is hugely empowering to take control of the elements of your life that you are able to, particularly at the moment, and teaching tomorrow’s generation the correct behaviours now when it comes to money can help to set them up for the years ahead and a life of financial wellbeing.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
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