Learning about financial health is critically important so it’s never too early to start teaching children about saving, investing and budgeting. That’s why it is hoped that when Ireland’s National Financial Literacy Strategy is published this year, it will put an emphasis on the importance of starting young.
Finland, which has committed to having the world’s best level of financial literacy by 2030, already has a comprehensive experiential schools programme in place to help youngsters get a firm grasp on the subject as early as possible.
It’s a subject Ireland’s school-goers appear to need grinds in, given that only 57 per cent of adults in Ireland meet the minimum OECD level of financial literacy. This is defined as being able to manage your money on a day-to-day basis with ease and consider your long-term financial wellbeing. It means 43 per cent of us not don’t how to do this.
A similar number of people do not have the minimum level of digital financial literacy either. In a time of banking apps and digital wallets, that’s a worry.
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Many financial education programmes for children and young people here are aimed at senior cycle in secondary school, from about age 16 onwards. But the Government believes financial education should begin in early childhood, ideally at preschool stage. There are opportunities for financial literacy learning at every level in the school curriculum, it points out. Teaching it should be supported, particularly through core subjects such as mathematics.
Many existing financial education programmes focus on skills such as budgeting and saving; the new strategy should also see financial education supported in relation to managing debt, digital financial literacy and making decisions around investments too.
“Schools play a crucial role in shaping young minds and incorporating financial education into the curriculum is essential,” says Marta Pelc, pensions adviser at Cantor Fitzgerald Ireland.
“While some secondary schools have started to include financial literacy in their programmes, there is still much more to be done. Financial education should be a staple in both primary and secondary school curriculums, ensuring that all students have the opportunity to learn these vital skills.”
At the primary level, financial education can focus on basic concepts such as saving, spending and the difference between needs and wants, she adds.
“As students progress to secondary school, the curriculum can expand to cover more complex topics like budgeting, investing, credit and debt management. Practical, hands-on activities, such as managing a mock budget or participating in a simulated stock market, can make these lessons engaging and memorable.”
Parents can help. Dawn Bailey, head of financial wellbeing at Bank of Ireland, suggests children could be taught the ‘50-30-20′ rule when it comes to managing their pocket money. “It means 50 per cent of your money should go on needs, 30 per cent on wants, and 20 per cent on savings,” she says.
Alternatively, younger children can divide their money into three jars – needs, wants and charity, with the latter also helping them get to grips with the need to pay tax, Bailey suggests.
Given the online nature of today’s world, any education on financial literacy must also include lessons on how to avoid cybercrime, she adds. Youngsters must learn to be media savvy and get their financial advice from trusted sources rather than following unqualified influencers on social media pushing the next crypto craze.
“Children are remarkably skilled at learning new concepts and financial literacy is no exception. Introducing basic financial principles at a young age – such as five [years old] – can help children develop healthy money habits that will benefit them throughout their lives,” says Pelc.
“Parents’ attitudes towards money and spending habits are the first lessons children learn at home. These early experiences shape their understanding of financial management. Simple lessons about saving a portion of their pocket money, understanding the value of money and making thoughtful spending choices can lay the groundwork for more complex financial understanding as they grow older.”
Making money real is also important, Pelc adds: “In today’s world, where physical cash is becoming rare and digital transactions are the norm, it’s even more important to teach children about money management. Many children now use cards for payments, which can make the concept of money feel abstract. Parents can help bridge this gap by explaining how digital transactions work, the importance of tracking spending and the concept of earning and saving money digitally.”
