Many parents want to build up savings for children but kids will be wealthier if they are taught how to manage their money.
Imagine your children being taught basic finance skills such as household budgeting, debt management and balancing chequebooks. Top that with the vitally important understanding of compound interest and other investment principles and you'd feel your kids were equipped to manage their finances in the real world, wouldn't you?
Unfortunately, in the UK, such basic skills are not yet a compulsory part of the school curriculum - children will not be required to learn such things as part of their maths GCSE until 2010 although certain aspects of looking after money can form part of the Personal, Social and Health Education (PSHE) & Citizenship classes where schools choose to teach it.
Personal finance lessons have been compulsory in 28 states in the USA for donkey's years and research indicates that pupils are richer overall by, on average, a year's earnings between the ages of 35-49 compared to those who have not had a financial education.
According to the Institute for Public Policy Research in the UK this could translate into:
- A couple with two children aged 5 and 11 being better off by about £32,000
- A couple with no children being better off by about £22,000
- A single person with no children being better off by about £13,000
The IPPR used basic data on average earnings provided by the Department for Work and Pensions for their calculations, which is why these numbers may seem a little odd. For example, I would have thought that couples with no children would have acquired a larger asset base than those with kids.
Nevertheless, it just goes to show that learning about how to handle money in the real world really does make a difference to one's financial well-being. Some of the US states started teaching personal finance in schools as far back as 1957. It's unbelievable that we're so far behind the times.
At any rate, for the time being educating your children about money is down to you. If you need help, use these top tips which will set you on the right path and learn how to become a richer couple.
