New research has found just 28% of parents have had a money-related conversation, such as discussing the importance of budgeting and saving or the dangers of debt, with their children in the past year, and just over one in 10 haven’t talked to their children about money at all over the same period.
In fact, the study by King Street Wealth Management found parents are more likely to talk to their children about Brexit and climate change than tackle basic financial topics like the importance of saving money or the dangers of debt. Just over half of parents (51%) have discussed Brexit with their children in the last year, and 42% have talked about climate change, while 41% have spoken to their children about the importance of saving, budgeting and money management.
Young Money, a part of the Young Enterprise charity, supports the financial education of children and young people and has produced planning frameworks outlining the financial knowledge and skills children need, to help with primary and secondary school financial education. It has also recently published Your Money Matters, a financial education textbook for secondary schools aimed at 14-16-year-olds.
Sharon Davies, CEO of Young Enterprise, warns that our increasingly cashless society, combined with the ease of making online and in-app payments, means it can be easy to get into trouble with money.
“Young people are under more pressure now than ever to manage money responsibly,” she says. “Getting a financial education on how to manage money, spotting the pitfalls online, and developing positive financial habits from an early age is crucially important in preparing young people for their future life and work.
“Parents are not shying away from addressing difficult topics, but it’s important that managing money is prioritised alongside the other important subjects for young people.”
Here, Young Money suggests 5 easy ways parents can help young children understand the basics of finance:
1. Count the money
Show younger children the coins and notes in your purse or wallet and ask them to help you count them. Talk about the different sizes, colours and numbers on them and how many different coins and notes there are altogether.
2. Talk about where money comes from
We’re an increasingly cashless society, and thanks to cashback services it’s easy for children to assume the supermarket is the source of all of funds. Showing your child your payslip and explaining what you had to do to find employment are good ways of building financial understanding. For older children, you can look at the deductions made from the gross pay, and what they might be used for.
3. Explain the difference between needs and wants
Contrast examples of goods children need every day, such as food and clothing, and items or toys they might want but don’t need. This is a great way of introducing the concept of saving and the need to exercise restraint in their spending, as well as helping them to understand that sometimes times will be hard and you won’t be able to afford everything you want.
4. Get them involved
Let them have a say in appropriate spending decisions, such as buying a new computer or a kitchen appliance. Making real-life spending and saving decisions about even small amounts of money can help children understand more about managing money.
5. Budgeting brainstorm
Look at utility bills together to explore the cost of running a home – can they help to manage the household budget? See if they can find any savings that could be made.