Talk Money Week: experts want to get parents and children discussing finances
The concept of money and saving is a crucial part of being financially independent and responsible.
Blacktower Financial Management surveyed 1,500 UK parents to understand how parents talk to their children about money. The study reveals that too many mums and dads are neglecting their duty to educate their children about money matters.
The recent survey data has revealed that an astonishing 51% of UK parents struggle to talk to their children about money matters, with 6-in-10 parents (63%) not regularly discussing finances as a family.
59% of parents believe their children should grow up without any active financial education. This is a pleasant theory, but a lack of understanding of basic finances can leave children falling behind as they grow up and struggle to manage savings and outgoings.
At what point are parents discussing money with their children?
Contradictory to the number of parents struggling to talk to their children about money, 4-in-5 (78%) worry about their child’s financial future and that an additional 84% of parents appreciate the importance of helping children learn about money. So, despite all this, why do parents still find it so hard to discuss finances with their children? Blacktower have analysed when on average UK parents start talking to their children about money matters, see below:
Saving for college/university – Teenager
Pocket money – 12 years and younger
To start saving early – 12 years and younger
Making a budget – Teenager
Managing and avoiding debt – Teenager
Having good credit – Teenager
Investing – Teenager
Using credit cards – Teenager
Buying a car – Teenager
Renting – Teenager
Paying off loans – Don’t speak to their children about this subject
Saving for retirement – Don’t speak to their children about this subject
Pension – Don’t speak to their children about this subject
Top tips for educating children about money
Talking to children about money is a crucial step in their development and helps them to become independent as they grow up. However, not enough parents are discussing the importance of saving or paying people back. To make this a little easier, Blacktower has outlined our top three tips for educating children about money:
1. Take your children shopping
Letting your children accompany you when you visit the supermarket can be a great lesson in money management. Let them pick what they want to eat for lunch over the next week, but set a spending cap. For instance, they may have to choose between fruit or chocolate. Not only does this help them learn about budgeting, but they’ll also develop an idea about value.
2. Let your children make mistakes
The best way for children to grow and mature is to let them make their own mistakes. Watch from afar and let them spend their pocket money how they please. As and when they run out, and come to you for more, talk to them about why it’s important not to spend all your money at once. The more freedom you give them, the more responsibility they’ll begin to take over their own money.
3. Introduce cash at an early age
The best possible way you can educate your children about money is to introduce the concept at an early age. Traditionally, children are first exposed to saving with piggy banks. These are a great idea because they allow children to develop a great feeling about finally reaching a certain amount, which will carry through to adolescence and adulthood.
4. Avoid impulsive buying
It is a great idea to take a lead-by-example approach as your children grow and therefore, allowing them to see you weigh up the pros and cons of each purchase allows them to take up a careful mindset when it comes to finances.
5. Invest in Pocket Money
Instead of responding to money requests here and there with no set financial schedule for your teenager, invest in a pocket money weekly allowance. This way, they will learn how to portion their money and save up for larger purchases.
6. Be Careful with Virtual Money
Consider downloading a money-saving app for children and teenagers. This allows them to adapt their financial literacy to the digital age, something which will come in particularly useful as they begin to open student accounts with overdraft facilities. Secondly, teach your child about buy-now-pay-later schemes which are popping up on most retail sites; these can seem very appealing but, without financial literacy, can lead to sizable debts.
John Westwood Group Managing Director at Blacktower Financial Management comments on the study “It’s eye-opening to see the large percentage of UK parents struggling to talk to their children about money even though parents know they are the biggest influencer over the development of their child’s money management skills. We hope that our useful tips will help you to start educating your child about money and have a positive impact on your child’s financial future.”
