Thursday, 12 September 2013

The Most Important Lesson To Teach Kids About Money #ThinkMoney

Think Money are running a competition on their website for bloggers to write about what they think is the most important lesson to teach their kids about money. This is my entry for that competition.
Alice cooking her books

Well, it just so happens that me and Emily (10) were having a conversation about money last night. She is interested in how finances work - how can we afford our house? What money comes in and why can't we spend it all? How do people pay for more expensive goods like cars and home improvement or once in a lifetime holidays? We talked at length about these and do you know what, Shakespeare came to mind. Specifically Polonius in Hamlet, as he delivers his advice to his son Laertes, he says

'Neither a borrower nor a lender be.'
    (Polonius, Act 1, Scene 3)

And that is the crux of my advice for my children. Shakespeare, over 500 years ago sat down writing this amazing play, Hamlet, and even he knew the perils of pay-day loans.

I spoke at length to Emily about money and I explained that a lot of people borrow money in order to buy the things that they want and sometimes the things that they need. Especially for houses and cars. We discussed the concept of a loan for a car, which can be summed up for a child by this diagram I made.

We also discussed why it is necessary to borrow money. Not many people can afford to buy a house outright, we are not all Scrooge McDuck unfortunately. We agreed that sometimes borrowing was necessary. And likewise, if having a great car is your thing then it is not all bad. A loan for a car could also be a good thing, as long as it was carefully considered and well thought out.

I then asked Emily what she would do if she needed a car, and she wanted a really fancy all singing all dancing one. She said... 'Erm...Mum I think I'll save up.'

My work here is done!

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