A recent survey by Blacktower Financial Management Group showed us that half of UK parents struggle to talk to their children about money. There are many reasons why parents may not feel comfortable doing this, for example, feeling overwhelmed by the complexities of money or wishing to shield their children from financial struggles. However, 4 in 5 parents admit to being worried about their children’s financial future, and with the financial impact of the covid pandemic likely to be ongoing for some time, there couldn’t be a better time to talk to your children about money!
For many, the first introduction to finance management is through receiving pocket money (and keeping it safe in a piggy bank!). Pocket money can prompt children to choose between the immediate pleasure of buying a few sweets or saving for a larger toy. However, with society increasingly moving away from cash, many parents may feel unsure how to handle this. If you want to give your children pocket money but never seem to have the change to give to them, there are a number of pre-paid cards and children’s bank accounts available- please see here for further details. This will allow children to budget and get used to how banking works, whilst as parents you have the peace of mind that they cannot spend more than they have in their account.
Another great way to guide your child to manage their own money is to encourage them to save towards items they want to purchase, perhaps allowing them to earn additional money by doing extra jobs around the house. This will teach them a good work ethic and will allow them the opportunity to reflect on if they really want the item in question.
With the summer holidays approaching, perhaps you could allow your child to budget for a day trip? They will need to consider things like entrance fees, food, transport etc. They may realise, for example, that by taking a packed lunch they have more money available for ice creams or attractions. It is important to let your child take control of the budget and allow them to make mistakes - you can use these mistakes to discuss what they would do differently next time.
For older children it may be helpful to talk to them about your household finances. Many children will have little understanding of the number of outgoings required in running a household, and how these can quickly add up. A great way of doing this is to create a budget using IE Hub with your child, as this will allow them to see exactly how much money is coming in, and how this is being spent. This will pave the way for discussions about the importance of savings and will allow them to make suggestions on how you can save money, what they see as priorities etc. Click here to create your account with IE Hub today.
Above all, it is important to teach your child that if they are facing financial struggles there is help available and that by discussing their concerns either with a friend or family member or with a professional, they will be able to make a plan to improve their financial situation.