Explaining the Value of Insurance to Children

When you’re giving children an education in finance, one area that is vital to include is insurance. As a concept, the value of spending money on insurance can be a difficult one for children to grasp, but the tips below should help you illustrate and explain why insurance makes up an important part of a financial portfolio.

Explain how insurance works

Put in its simplest terms, insurance is there to protect a policy holder and their possessions should they suffer losses due to theft or another unexpected event. The easiest place to start is to explain that insurance is there to protect the value of your things.

Give kids an example to make it easier to understand. If they have saved up birthday money or pocket money to buy something special, demonstrate the value of insurance with this item. Get them to remember how long it took to save up for that item and then ask what they would do in order to replace it if that item was destroyed in a fire. You could then go on to explain how having an insurance policy in place would provide the money to replace that item.

Talk about the different kinds of insurance

Explain the different kind of insurance policies that you have – the one for your car, your home (buildings and contents, explaining the differences between the two policies), health insurance and pet insurance. Show them how you can do a search for new insurance quotes on a site like igo4 limited. Pet insurance is often an easy one for kids to get their head around.

Show them your insurance policies

Unless kids see the policies, the concept can still remain a little vague. Insurance policies don’t really make for easy reading, but sitting down and going through say, your car insurance policy, will allow you to explain what different aspects of the policy mean and it will prompt questions from the children if they don’t understand something.

Get them to understand the consequences of not being insured

Use the example of your home and the contents within it to explain what kind of situation you’d be facing if you didn’t have insurance and the worst happened. Get them to imagine what would need replacing after a fire or flood or anything else that would require a rebuild or refurbishment of you home, and how impossible that would seem without having an insurance policy in place.

Top Things to Consider When Buying a Property

Buying a property is often one of the biggest decisions you can make in life, so it’s important to make the right choice. Christmas generally stalls the house-hunting process but now that 2014 has arrived you may be starting to think about recommencing your search. Here are a few top tips for choosing the perfect property.

Plan your budget

Once you start house hunting it’s easy to get caught up in the excitement of finding your dream home.  You may love to be able to approach Mayfair estate agents or other exclusive areas but if the area is not within your budget then there’s no point in starting your search. It’s important to establish your budget before you do anything else. If you need to seek finance for your purchase, most banks will require a 10-15% deposit. You should also speak to your bank or a mortgage broker to find out how much you will be able to borrow. You need to take into account other expenses as well such as stamp duty, mortgage arrangement fees, the valuation, removal fees and the cost of furnishing or renovating your new home.

Think about the location

Location is everything when it comes to buying a home. You not only need to think about how suitable the location is for your needs (transport links, schools, local amenities etc) but also how the location may affect your property as an investment. Research up-and-coming areas which may give you a bigger return on your investment if you eventually come to sell.

Go on as many viewings as possible

Many people say that when they find their dream home they know as soon as they walk in through the door. Although house hunting can be exciting, it’s important not to rush into buying the first great house you see. Don’t feel pressurised by an estate agent telling you they’ve already had a lot of interest in the property. Move at your own pace so you can be sure you’re making the right decision.

Buying a new property can be a very fulfilling step to take but it can also be very stressful and be prepared for the fact that things might not move as quickly as you’d like. Complications can arise and you may be stuck in a chain which prevents the sale from moving forward. Remember to stay patient and make sure you go through all of the necessary protocols to ensure your sale goes through as smoothly as possible.

What Should be Included in a Financial Education Curriculum?

financial education in schools imageFinancial education is something that many feel should be a staple of the national curriculum. Many parents feel that their children are currently leaving school at the age of 16 or 18 with very little knowledge of finance or money management.

When considering the inclusion of financial education within the curriculum the government toyed with a number of ideas. Some felt that it should be covered off within Mathematics; others felt it should be a module within business studies or economics however some still felt that the only effective way would be to commit a few hours per week to a specialist subject known as ‘financial education’.

With this in mind many are asking the question; what should be included within the curriculum? What would offer genuine value to students and help them when making important financial decisions in the future? Throughout this article we are going to discuss 3 topics that we think should be included:

1.     Budgeting and Money Management

We think budgeting and managing money should be at the top of the curriculum. It has been in the news recently that more and more young adults are getting into trouble with short term credit sources like payday loans due to ill-managed finances; this simply reinforces that worries that many have regarding a lack of financial education.

Firstly, students could be taught how to create a budget including splitting their income and outgoings and calculating their disposable income. Tips could then be offered on how to increase their disposable income by making cutbacks and saving money. Emphasis could be placed upon the importance of living within your means, setting financial goals and the dangers of overspending.

2.     Loans and Mortgages

Within this topic teachers could explain the different types of loans available and where they are available from. Popular loan and mortgage related jargon such as APR, interest and repayments could be broken down to make it understandable. Credit history could also be included within this topic, showing case studies of the effects of failing to repay loans and the importance of having a good credit score when applying for loans, mortgages or credit cards.

Although it may be a number of years before students are looking to apply for mortgages we think it’s important they are taught the basics. Sub-topics could include where you get the mortgages from, deposits, repayments and remortgaging.  Special emphasis could be placed upon schemes that designed to help young adults get on the property ladder such as Help-to-Buy.

3.     Saving and Investing

The final topic that we think should make it onto the curriculum is saving and investing. It is inevitable that at some point students will find themselves with surplus cash and it is therefore important that they know what to do with it.

Throughout this topic, students could be taught about savings accounts and the different types of accounts available such as fixed rate bonds, instant access accounts and ISAs.  Within this topic students could also learn about emergency funds and the importance of having one to cover unexpected expenses.

Although it is likely that some types of investing (such as stocks and shares) will be covered off within business and economic studies, we believe it’s worth cross referencing it within the financial studies curriculum. Along with stocks and shares students could learn about investing in property, technology and gold.

If financial education does make it onto the curriculum then making it fun for students is very important. The last thing we want is for students to walk out of the lessons feeling negative about the future of their finances. We believe that the subject should be very hands-on with frequent use of fake money to illustrate the various topics. What would you include within the financial education curriculum? Let us know by commenting below.

This article has been brought to you courtesy of Marie. Marie endeavours to help her readers understand personal finance by writing how to guides and top tip articles on a variety of sub-topics. You can read more of her work by clicking here

Why Teach Children About Wills?

image of willTeaching children about all aspects of finance early in life is important, but it needn’t be boring. The trick lies in getting children to understand the whys and wherefores of money in a way that is both fun and which will carry them through life. This isn’t about attempting to get rich; rather, it’s about instilling in them the knowledge that the sensible management of money can help bring about freedom, independence and peace of mind.

As part of this overall process, it’s also important that children understand the whole principle of inheritance. In this way, they will be better prepared for their independent financial lives when the time comes when they do inherit money – and it will help develop in them a sense of the permanence of the value of goods, property and investments.

This is a desirable thing for most parents to achieve with their children. But it’s very important not to confuse this educational process with any sense of greed or materialism; it’s a fine balance which wise and far-sighted parents should be able to achieve. And there are fun ways this can be achieved – with plenty of resources on this website to investigate.

But when it comes to leaving legacies and instilling an understanding of this whole area in children – the process is a little more delicate. Most children instinctively understand, by the time they reach somewhere around double figures in age, that life is fleeting. At this age, they’re beginning to understand the permanence of death. They’ve usually had first hand experience of a grandparent or other family member passing away – or someone else close to the family – and understand what it’s all about.

Around his sort of age, it’s perfectly sensible and natural to talk to children about things like wills and probates – and to help them understand what happens after someone’s death – to all their belongings and assets. It’s easier to talk and think in terms of something that will mean something to children rather than a person’s entire estate. There may even be a keepsake that a relative or friend has bequeathed to a child – and this can become a pleasant and happy memory; a nice way of remembering someone fondly after the initial period of grief has passed.

It’s also a good way of understand the process of bequeathing things in the way you want them.

Overall, teaching children about wills is a natural part of understanding the basics of finance in a way which will help them in later life. The knowledge that they will inherit something at some point in the future – but not to rely on such inheritance – is also helpful in allowing children to come to terms with the one inevitability of life – which is, of course, death. But instead of being in any way morbid – this knowledge should help set children’s minds free to appreciate the present and to always carpe diem whilst simultaneously being sensible with money. As the saying goes; live as though you’ll die tomorrow, but farm as if you’ll live forever.