Talk to kids about money
PARENTS are storing up trouble by not talking to the younger generation about money, with more than half admitting they struggle to do so.
Yet four out of five parents say they worry about their child’s financial future, amid sky-high student debt, rising house prices and the pandemicstricken jobs market.
This is My Money Week 2021, a personal finance education initiative aimed at helping schools teach pupils to handle money wisely. Unfortunately, many parents are falling short. Too many are neglecting their duty to educate children about money, with many preferring to keep them in a state of “blissful ignorance”, according to new research from Blacktower Financial Management Group.
Group managing director John Westwood said this could backfire by leaving them ill-prepared to manage their money in adult life. “A lack of understanding around basic finances can leave children falling behind.”
He suggested families need to start talking about university fees, the value of saving early, how to budget, and the importance of avoiding debt.
Parents should also discuss longterm goals, such as saving for retirement at an early age.
Westwood said these three tips could help.
TEACH THEM TO BUDGET
On your next trip to the supermarket, let them pick what they want to eat next week, but set a spending cap. “This will help them learn about budgeting and the importance of getting value for money.”
LET THEM MAKE MISTAKES
Let them spend their pocket money how they please but when they run out and ask for more, explain the importance of not spending it all at once. “The more freedom you give, the more responsibility they’ll take.”
GET THEM SAVING EARLY
Start early, using a piggybank or children’s savings account, and set them a savings target. “The great feeling of saving a certain amount will carry through to adolescence and adulthood.”
It is better your children learn about money from you, before they are distracted by Instagram influencers. “Parents can still be the biggest influence over their children’s money management skills,” Westwood said.
Research from Ford Money shows the young are keen to learn from older family members, with three quarters open to savings advice.When parents and grandparents shared advice, almost eight in 10 said it shaped their savings and financial habits. The top three pieces of advice relayed by older savers were:
● Start saving as soon as possible.
● Be wary of credit and borrowing.
● Keep a close eye on your finances and budgeting.
Ford Money’s chief deposits officer Suzanne Lewsley said: “The past year has taught us that being prepared for unexpected events is crucial.”
Financial blogger Kara Gammell of YourBestFriendsGuidetoCash.co.uk added: “Teaching little ones how to be good with money is a lesson that will last a lifetime.”