Personal Financial Capability - developing money management skills
Helping to develop money management skills
Children in care have often missed out on key opportunities to learn about money as part of everyday family life before entering care. Changes in care placements mean they can miss financial education where it does exist in schools too.
Many of the attitudes to important money issues are formed when children are young, so starting to help children learn about money early on is crucial. At the primary phase young people need to understand basics such as value for money and the importance of saving to get the things they need. Later on as they progress through their education, more complex concepts such as credit and other financial products can be introduced.
Making the transition to adult life without these important skills and knowledge often causes financial distress as some care leavers find themselves unable to cope with the demands of independent living.
How can we help develop money management skills?
The ability to become financially capable is important for all young people. However, feedback from young people in care as well as legislative requirements about leaving care indicate the following aspects of financial capability have particular importance to them:
Practical experience with money - children in care need opportunities to handle real money and make their own spending choices. This can be a particular problem for some young people in care placements where carers are concerned about money being spent in ways that increase a risk to personal safety if young people are given cash to spend. However, pocket money is one of the first ways for children to learn the basics of managing money and does breed independence.
Budgeting - young people need all the support they can get with this. Schools should be able to provide guidance with budgeting, but it is also helpful if aspects of day to day budgeting are discussed at home so young people are aware of essential expenditure involved in being an independent adult.
The world of work - a relatively low number of children in care undertake part-time jobs. This can provide a meaningful opportunity to develop employability skills, as well as offer an opportunity to earn additional funds for personal savings and budgets.
Savings - important to encourage! Various government and county schemes have been recently announced to support young people in care to save.
Young people in care can be vulnerable for many reasons. There is a danger that they may not learn how to make sensible spending and saving decisions as their financial needs are met in care placements. Careful guidance and support is needed to ensure that these skills are learned as a result of education and experience with personal money management if we are to ensure that informed decisions and good money management skills lead them away from debt and the potentially devastating consequences after they leave care.