Would you have a conversation with your nine-year-old child or grandchild about debt? Or discuss topics like bailiffs and mortgages? Most adults would likely avoid discussing money problems with such young children, but DebtAware, a financial education charity, is determined to change that. Today, I had the opportunity to visit St Mary’s Catholic Primary School in Chorley, Lancashire, to witness the incredible work this charity is doing first-hand.
As I entered the sunny classroom, decorated with vibrant posters on the importance of reading, a sense of calm filled the air. In front of me, students were fully engaged in a worksheet that explored the distinction between good and bad debt. In today’s economic climate, the need for financial literacy is more pressing than ever.
During our conversation about debt, one student, Isabelle, eagerly shared that she is saving money to purchase her first home. She explained, “When I see something I want, I assess how much money I’ve saved and remind myself that I also have other financial responsibilities.” Isabelle’s eagerness to demonstrate her grasp of the lesson was inspiring.
The average level of debt in the UK has increased by 19% since 2022, according to personal insolvency provider Creditfix. Shockingly, approximately six million low-income families are burdened with unsecured debt, amounting to £14.2 billion as of May 2023, according to the Joseph Rowntree Foundation. Moreover, nearly six in ten individuals who rely on credit to pay their bills have less than £200 saved. In light of these statistics, DebtAware’s impact is undeniable. Since its inception in January 2013, the charity has provided financial education to over 80,000 children, teaching them essential money management skills such as budgeting and responsible borrowing. This year alone, DebtAware plans to deliver lessons to approximately 100 schools in the North East of England.
DebtAware operates under the umbrella of the Debt Advice Foundation, a national charity that offers free and confidential assistance to individuals who feel overwhelmed with loans, credit, and debt. Surprisingly, research conducted by digital payment provider Pay.UK reveals that three-quarters of young adults aged 18 to 24 wish they had received more comprehensive financial education in school.
Returning to the classroom, the lesson of the day is led by DebtAware volunteer, Brian Souter. With over 50 years of experience as a retired teacher, Brian effortlessly captivates the students from the moment he steps into the classroom. He explains, “The Debt Advice Foundation assists individuals who have fallen into debt, but our mission is prevention rather than cure. We aim to equip children with knowledge, understanding, and skills to foster a responsible and safe attitude towards money. At this tender age, children are like sponges, eager to absorb the right skills. However, as they progress to secondary school, making the same impact may prove more challenging.”
Today’s session focuses on teaching a Year Five class about distinguishing between wants and needs. In the upcoming months, the students will also learn about budgeting, payments, savings, and borrowing. Brian initiates the discussion by asking the class, “What is debt?” The children reply in unison, reciting from their worksheet, “Debt means borrowing money and having to pay it back.” The level of engagement and depth of conversation among the students is truly remarkable.
Unfortunately, under the national curriculum, primary schools are not obligated to teach financial literacy to their students. However, schools can choose to collaborate with organizations like the PSHE Association to develop their own curriculum, which may include lessons on saving, spending, and making informed financial decisions. It is not until students reach secondary school that the government recommends introducing them to the concept of debt. Nevertheless, the children I spoke to already possess a keen awareness of the potential pitfalls of financial mismanagement. Declan, aged ten, proudly shows me his black Fitbit smartwatch, which he has been using to track his spending. He confidently states, “Learning about money now will help us avoid mistakes in the future. I am focused on saving my money to have more financial security as I grow older.”
Lisa Hesketh, the Year Five teacher, firmly believes in arming children with the necessary knowledge and skills to effectively manage their finances. She emphasizes, “In every module, we revisit debt to make the children understand the distinction between good and bad debt.” Hesketh recognizes the importance of early financial education in instilling confidence and facilitating meaningful conversations at home.
For Isabelle, these lessons represent a step towards achieving her dream of owning her own home in the future. She proudly shares, “My family and I rented for three years, living in three different houses. Now, we are finally getting our own house. I have a bank account where I save my money because I want to invest wisely, ensuring a secure financial future.”
Perhaps we could all benefit from a lesson or two on financial literacy. If you want to teach your own children about money, you can start as early as age three or four, when they begin asking questions. Money Helper, a Government-backed money guidance website, suggests discussing the cost of items during shopping trips and encouraging children to count coins and notes. By the age of five or six, children can grasp the concept of saving, so motivate them to set aside a portion of their pocket money each week for a desired toy. As children enter the age of seven or eight, they can differentiate between wants and needs. Consider using a Venn diagram to help them categorize items and identify good and bad reasons for borrowing money. When they contemplate spending their pocket money, encourage them to make a shopping list and calculate the total cost. As your child progresses to secondary school, discuss responsible money management and understanding concepts like budgeting and reading receipts or bank statements. Between the ages of nine and 12, children can typically comprehend the concept of debt, making it an opportune time to discuss the reasons behind paying interest on borrowed money and what to do if repayment becomes challenging. Providing opportunities for additional chores and setting savings goals can reinforce their learning.
If you’re interested in more tips and tricks for teaching children about money, visit moneyhelper.org.uk/en/family-and-care/talk-money.
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