As we approach Christmas, many parents will be thinking about buying the presents on the children’s Christmas list. Older children may be considering buying presents for family and best friends with their pocket money. At a traditional time of overspending, it has never been more important to consider financial lessons in the curriculum.
Overspending on presents
Many parents will confess to spending more than they intended to, and in some cases more than they could have afforded to, just to ensure their child or children had the gifts and experiences they wanted. Whilst Christmas is about family and giving, the overspending by parents can set a trend for children to follow as they grow up.
From school age, it’s vital that children are taught the importance of budgeting, and how to do this effectively. This then encourages children to spend within their means, and manage money when they leave school and are responsible for their own finances in the long term.
Education on personal finance
If you overspend on presents, you usually manage to do so through using an overdraft, credit card, loan or store card. Each of these is a form of borrowing freely available to most adults, but which children are not actively taught how to use or manage in a personal capacity.
Borrowing is of course not just for Christmas, but it’s important to educate children in the process of borrowing and repayment, particularly as this period of the year is one of the highest for credit use. It’s essential that children understand the types of finance available to them once they leave school, the terms associated and effects they have on your budgeting and so on. Even simple financial lessons in the difference between debit and credit cards can have a positive effect on children’s attitudes towards money.
The spending cycle
When we borrow or overspend at Christmas, there’s usually a rippling effect felt long into the new year. Whether it’s the credit card bill arriving at the end of January or loan repayments that continue until the next Christmas, children should be aware of the spending cycle and the consequences of borrowing.
We provide free financial resources from Levels 1 to 3 and National 4. These cover everything from the introduction to needs and wants, basic budgeting and shopping to more advanced topics like credit cards and other borrowing, making a profit, savings and interest rates. Written and produced in accordance with CfE financial maths and life skills units, we believe that children can benefit from learning finance topics long into adulthood. For more information on our free resources, or to download yours, please click here.