Financial Capability of Children, Young People and their Parents in Scotland
Money Advice Service highlights “worrying lack of money skills among children and young people in Scotland”.
Research by the Money Advice Service shows that talking to children about money and giving them experience of making money decisions could be as important as saving for their future.
Findings from a report released today by the government-backed Money Advice Service (MAS), demonstrate a, what the organisation says is a “worrying lack of money skills among children and young people in Scotland”.
The survey found that children whose parents involved them in decisions and discussions about money, and allowed them to experience using money, are more likely to develop vital financial skills. These skills can have a major positive impact on their ability to save, budget and plan ahead financially in later life. However, children who are not included in these discussions, or do not experience using money, risk being left behind.
Whilst the research highlights the importance of experiencing managing money during childhood, early findings indicate that many 16–17-year-olds are ill prepared for dealing with adult financial responsibilities. One in five 12–17 years olds are unable to tell how much was in a bank account by looking at a bank statement, whilst 29% of young people only keep track of how much money they have in their head, and 21% do not keep track at all.
Parents in Scotland were asked at what age they thought a person’s money habits and attitudes were formed, half of parents in Scotland think that habits become established at age 12 or later.
This is in contrast to previous Money Advice Service research which showed that by age seven, children are able to self-regulate their behaviour and by the time they are eight, they have a good enough concept of the future to begin to build a savings habit.
When it came to educating children about debt only one in five parents of 12–17-year-olds have never talked to their children about the risks of borrowing money and the impacts of debt.
The report shows that there is still an opportunity to increase levels of financial education in the classroom. Currently, only 46% of children surveyed in Scotland aged 7–17 say they have learnt about money management at school and 6% have talked to their teachers about money. Nine out of ten young people that had learnt about money management at school said it was useful.
Four in five children talk to their parents about money, and three in four parents believing that they are a good financial role model for their children. Considering these statistics, MAS said “it is surprising that only three in five parents feel confident talking to their children about money”.
Only one in three parents talk to their children about household finance, although this does increase with age. However, only 40% of parents of 16–17-year-olds say they discuss their household finances openly with their children.
Allison Barnes, Scotland Manager, Money Advice Service, said:
“There are many ways that parents can start to encourage their children to interact with money from a young age. We know that children learn best when they gain practical experience with money, and allowing them to make decisions and learn from their mistakes lays the foundations for better money management skills as they grow up.”
Money Advice Service’s report is being launched as part of Financial Capability Week.