What should you teach your children about finance?

As a parent, you can rely on the education system to teach your children much of what they need to know to get a good start in life. But the curriculum is pretty packed and once the English, maths, science, geography, history, languages, RE and PE is over and done with there's not much time for some important life lessons - and that's where you need to step up and prepare your child for adulthood.

While maths lessons might teach your children numerical skills, it's important that you build on that and help your children to understand how to manage their money. After all, don't you wish someone had told you about all of this?

Credit Cards

More and more adults are using credit cards but, according to one study, more than two thirds of the people who have them don't really understand how they work. You need to explain to your children that these are a form of debt - and that you could face high fees and charges if you fail to keep up with the payments. Here are five things to pass on:

. Your credit limit will depend on your personal circumstances - and is likely to be a couple of thousand pounds. You won't know what yours is until you're approved so it pays to wait until you have this information.

. Credit cards offer an extra level of protection for big purchases.

. Opening offers - such as interest free periods and cashback - might be attractive but it's important to check what happens once an introductory period is over.

. Making the minimum monthly payment could cost you a lot more money in the long term - always pay above this, even if only slightly.

. Some credit cards are very expensive to use abroad. Check the fees before you travel to avoid being stung by a big bill when you get back.


Whether it's a rainy day fund or some money to help you afford a big ticket purchase, it pays to have some cash set aside in life. Yet, with interest rates at rock bottom levels you need to teach your kids how to make their money go further. Encourage your children to think about the long term benefits of investing their money - starting with a junior ISA.

If they get the bug early on in life then they'll appreciate the value of saving and stretching their resources further and can take that knowledge one step further as they get older and invest their money for themselves, whether that's investing in EFTs, CFDs or stocks and shares ISAs. Make sure, however, you teach them about the risk involved in investments - and to only ever take on a risk they are comfortable with.


It might seem silly to be thinking about your child's retirement before they even start work but it's important to appreciate that a pension is really not something to think about in retirement. It might provide a return when you retire - but a pension should be a lifetime financial product which you pay into throughout your working life. Get your child to ensure they're signed up to their workplace pension as soon as possible and tell them to look at this tool from Nutmeg - which helps to visualise what you need to save for a comfortable retirement.

Credit Rating

Credit ratings are proof that everyone really is defined by a number. Help your children to know what this shows and how to check their number. So many young people don't know about this until it comes to an important moment such as buying their first house. By then it can be too late to realise the nature of their financial situation.

Help your children to understand how credit cards work, how to find their credit rating, what they need to do about their pension and encourage them into good habits with saving and investing. Above all else, however, be open and honest with them. Talk them through your tax, insurance and bills as soon as they show an interest and encourage them to develop independence with their own money as soon as they have a decent level of pocket money. Clearly you won't want to introduce credit cards to six year olds but it's really important to help your child to develop good financial habits as they grow. It'll help them to see how those all-important maths lessons will come in handy in the 'real world' too.

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