The cost-of-living crisis is hitting hard and many of the children in your care will be overhearing comments about rising food and energy prices. But do you actually talk directly to them about money and finances?
Russell Winnard, COO of Young Enterprise, says it is important to start educating children about money and the concept of money management – ‘financial literacy’– as early as possible. ‘In 2013, the Money and Pensions Service identified that money habits and behaviours that will stick with children for life are formed by the age of seven,’ he explains. ‘By this age, children are able to recognise the value of money and are capable of complex functions such as planning for the future and understanding the irreversibility of some choices. Moreover, evidence shows that installing positive money habits early is key in shaping financial outcomes later in life.’
According to the Money and Mental Health Policy Institute, mental health and money problems are often intricately linked, with financial difficulties being a common cause of stress and anxiety.
The pandemic has also highlighted how important it is to have a ‘savings buffer’ and the need for being prepared for economic shocks. Despite this, Winnard says that only one in three children receives any form of financial education at primary school. ‘There should therefore be no surprise that according to a Young Money Inquiry Survey in 2021, 67 per cent of young people said they do not feel confident planning for their financial future,’ he adds.
GOING CASHLESS
We are living in an increasingly complex financial world as well as moving further towards becoming a cashless society and conducting more of our financial transactions online. ‘Early learning about money can also be challenging in a cashless environment,’ Winnard says. ‘Being exposed to a supermarket shop that doesn’t finish with money exchanging hands could present confusing messages to young children, particularly if the transaction includes “cash-back”. It is worth considering how we communicate cashless payments with this age group.’
Karen Wilding, early years maths consultant at EYMaths, agrees. ‘We used to buy things with our pocket money, but as we’re moving into a cashless society, it doesn’t feel like you’re spending money.
‘Many children are not going to shops and seeing parents hand over money, instead they are doing more things on their phone or computer, often without children seeing the transaction because it’s done while they are in bed. There is none of the overheard talk we had in the past about the cost of something, how much change you’re receiving or looking for something cheaper. Some children may not even know what money is and will only see their parents paying by card or phone.’
Winnard adds that, although children’s exposure to TV advertising has fallen by almost two-thirds in the past decade, young people are now more vulnerable than ever to false information due to an increase in the use of and access to social media and even scams through online games. Raising these potential issues from a young age can help children to question the legitimacy of online messages and save them from fraud in the future.
SPEND AND SAVE
‘Our responsibility as practitioners working with three- to five- and even seven-year-olds is to establish what it is our children understand and what they are experiencing outside of nursery because it is so important that anything they are taught is relevant,’ says Wilding. ‘So children may just experience things arriving in the post and not know that they have been purchased, or they may live in a shop where people still pay with coins so they are seeing those transactions because we are at a transitional stage. We need to be meeting children where they are at and building on their knowledge.’
Winnard says practitioners can begin to introduce children to the concepts of spending and saving so that they start to understand the value of money. ‘An important lesson is to understand the difference between needs and wants, and also to recognise that most people receive money for the work that they do,’ he says.
Wilding agrees. ‘It is meaningful for children to learn that things have to be bought and that the reason people have jobs is to earn money. We need to be sensitive and frame this carefully if a child’s parents do not go to work, but the idea that money buys the things they have is important because it can lead to discussions around looking after belongings, valuing them and also understanding that not everyone can afford the same things, which can lead on to altruism.’
While the early years children of today may not become an adult in a society who physically handles money, Winnard says it is also helpful to provide opportunities to use cash so they can experience handing it over in exchange for goods and receiving change.
He adds, ‘It is a good idea to provide opportunities for young children to use money, such as receiving less than they gave in change, while exchanging it for a product.’
Children should also be included in discussions around saving up for items, keeping money safe and planning for the future. ‘You can contrast examples of goods they need every day and items and toys they might want but don’t need,’ suggests Winnard. ‘This is a good opportunity to introduce the concept of saving up.’
Financial literacy tips
- Have conversations around needs and wants. You could tie this in with discussions around upcoming celebrations such as birthdays – what is essential to have and what is a treat?
- Discuss the concept of saving up for items rather than expecting to have things immediately.
- Share picturebooks that involve characters buying or sharing items or saving money, such as the Money Bunnies series by Cinders McLeod, It’s a No Money Day by Kate Milner or Last Stop on Market Street by Matt de la Peña and Christian Robinson.
- When talking about topics around jobs, such as ‘people who help us’, introduce the concept of doing ajob in order to earn money.
- Take small groups of children into the local community to experience purchasing items, such as fruit for snack time. Talk about the budget, look at the price labels, add up what the shopping is going to cost and enable the children to experience handing over money.
- When discussing sustainability issues, introduce the concept of ‘living within their means’ as a way of avoiding waste and over-consumption. Introduce skills for repairing toys and clothes or repurposing in order to save money.
- Consider discussing what it is like to not have money and introduce the concept of poverty. How can the nursery help others in the community?
- Encourage children to make informed financial decisions through programmes such as Money Heroes (see Further information).
- If parents are in a position to give their children pocket money, ask them to introduce ideas around keeping money safe, planning and saving.
- Set up a shop in the role play area and give consideration to how the items are priced and how children will pay for them.
FURTHER INFORMATION
- Money Heroes is a free financial education programme for three- to 11-year-olds produced by Young Enterprise: https://moneyheroes.org.uk
- EYMaths: www.eymaths.co.uk