Over the last few years the idea of financial education for children has been becoming more and more of a reality. Initially just focusing on secondary age children it is now apparent that teaching children about how money works from an even younger age could be critically important in avoiding bankruptcy and debt problems in adulthood.
No Bad Products Just Bad Education
Of course there are some bad deals out there in terms of credit cards and even expensive bank accounts that people don’t need but generally loans, cards and overdrafts are useful if used properly. The issue arises when people are poorly educated about how money works and find themselves in spiralling debt with no idea how it happened. The concept of interest on savings and borrowed money is a total mystery to many people, and this can lead to major problems.
Start Them Young
By starting to teach children about money at primary school it will set these future adults on the right track from day one. Of course, money is not a subject a 6 year old would find instantly fun but with the right lesson ideas they could easily learn some of the basic ways in which money works. Getting the basic principles of interest, loans, saving and finance could set the perfect foundations for further education in the secondary school environment. Much of the problem with poorly informed adults comes from a lack of appreciation for the consequences of not understanding financial products. These days all financial institutions and companies are heavily regulated, this means they are holding up their end of the bargain by being clear and open about the costs and consequences of misuse. Where the system falls down is that no matter how clear companies are, if the user simply cannot grasp the concepts on offer it is all pointless. If a user fails to read the small print, or take any notice of a clear bold statement about APR then the result is not going to be a good one. At the very least someone who had been taught an appreciation of interest would take out a credit card with the knowledge they should pay it off each month to avoid extra cost.
If all children understood what interest is by the age of 16, the chances of them getting into trouble as an adult would be vastly reduced. Loans can be incredibly helpful when used correctly, loan companies want people to use their products properly because they are unlikely to ever get their money back from someone who becomes bankrupt. Understanding the principle of a credit card and credit ratings would help millions of Britons in the future to avoid running up unsustainable levels of debt.
Financial education is now being used in secondary schools and trailed in various primary schools across the country. Children are learning about the economy in simple terms, loans, credit cards, store cards and saving too. Teaching young people how to save and use financial products properly can only lead to a more sustainable larger economy.
Article provided by Solution Loans; a technology led finance broker aiming to provide the most suitable type of credit through advice and a broad range of financial options.