5 money TIPS kids will THANK YOU FOR
Discussing money matters with teenagers and young adults doesn’t have to be daunting. Our finance editor explains how to inspire positive, informed and confident attitudes towards saving and investing in their financial future
1 START THE CONVERSATION
Were you brought up to feel like talking about money was taboo? It’s time to shake off that perception and be more open with the next generation. The younger your children are when they’re introduced to these conversations, the more comfortable they’ll be when they need to bring up the subject.
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‘Start by discussing the household finances, explaining how much things cost and talking to them openly about your earnings, savings, bills and even debt,’ says Good Housekeeping’s finance editor Kalpana Fitzpatrick. ‘Your child will gain a much better understanding of money matters if you’re open about your own finances and how you manage them.’ Share interesting resources, podcasts or apps with them to encourage them to learn more.
2 GET THEM INVOLVED
There’s no better way to get to grips with finances than to actually have a go. ‘Budgeting is a vital life skill that will empower kids to manage their money when they’re older,’ says Kalpana.
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‘To help youngsters learn about budgeting, give them some practical responsibility and the tools to understand it,’ says Kalpana. ‘Start with consistent pocket money; they should know what to expect and when, so they can plan how they will spend and save it. There are also a number of budgeting tools they can use to help them learn about money management.’ You could even trust older teenagers with the weekly food shop, so they can practise shopping on a budget – important preparation for independent living.
3 BUILD THEIR CONFIDENCE
Learning to understand financial concepts such as good versus bad debt, how to read payslips, how tax works, and the difference between saving and investing, will help young people feel more confident with money and enable them to make informed decisions in the future.
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‘There’s a plethora of resources available to teach your children about money. If they’ve started work, talk to them about their payslip: what the deductions mean and what different types of taxes are,’ says Kalpana. ‘Also discuss with them how they can split their income into various pots, such as savings, spending and maybe even giving to charity.’
4 ENCOURAGE THEM TO CONSIDER INVESTING
‘Getting into a good savings habit is essential, but it’s also helpful for young people to understand how investing works,’ says Kalpana. Opening up the world of stocks and shares doesn’t have to be daunting. ‘If you’ve never invested yourself, this could be a learning curve for you both, so take the journey together,’ she adds. ‘Try reading Yummi Yoghurt: A First Taste Of Stock Market Investment by John Lee for an introduction to the subject that’s aimed at young minds.’
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If your children are under the age of 18, you can start them off by setting up a Junior Stocks and Shares ISA* for them. Get them interested by letting them pick some shares in a company they care about, whether it’s a fashion brand or a tech company, for example, and track its performance. With online investment firm The Share Centre, you can put as little as £10 a month into shares that appeal to you. ‘There’s certainly something very exciting about owning a piece of one of your favourite brands and potentially making money from it,’ says
Kalpana. ‘Of course, it’s important they understand that funds can go up as well as down, but the sooner they start thinking about investments, the greater the rewards could be.’
5 PASS ON LESSONS LEARNED
Making mistakes with money is part of life, so share with your children what you’ve learned along the way, such as the consequences of poor spending habits. ‘It’s better they get things wrong now and learn from that, rather than making mistakes with their finances when they’re older,’ says Kalpana.
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Encourage your children to consider long-term aims and bigger financial goals, such as buying a car or a house or setting up a business, and inspire them to save towards those and invest in their future. ‘Make it visual,’ suggests Kalpana. ‘With an ISA, for example, you can log onto the account together to see how their money is progressing, then plot it on a chart to create a savings buzz.’
Whether you’re building a brighter future for your child or investing for yourself, The Share Centre can help you on your journey. Visit share.com