Parents are bombarded with all sorts of the things to teach their kids. Good manners, how to be healthy, how tie their shoes and how to ride a bike. All of this, on top of working from home and home schooling during the pandemic can seem a little overwhelming. But teaching your children about money management is a must! Money is what makes the world go round in the 21st century, so it’s vital that we teach our kids the value of it, and how to manage it at a young age.
Research suggests that financial behaviours begin to develop as young as seven years old. Teaching kids about money from as young as four can have a really positive impact in the long run.
Still need more persuading? Let’s delve into some of the reasons why you should start talking to your children about money and finances:
1. To teach them the value of money
Kids need to learn the value of money. Ever checked your phone bill and been horrified to see that your child has spent £100 using data roaming abroad? Or seen that they have unwittingly spent half your savings on in-app purchases and whatever newest product someone’s tried to sell them on TikTok or Instagram?
Teaching kids that money does in fact not grow on trees, that it is earned through hard work and kept through savings and investment, is the best way to tackle such reckless spending. Pocket money and allowances are great tools for teaching your children responsibility, money management, and showing the true value of money. Expert Will Rainey says, “Pocket money is the most underrated financial tool there is.” Bluetreesavings’ digital piggy bank is a useful tool for teaching kids about money and saving in an interactive way.
Will Rainey will discuss just how best to manage pocket money, allowances and address the value of money in his upcoming Masterclass with Maji. He will be talking all things children and money.
2. To avoid them splurging all their cash and ending up in debt when they move out
Over 50% of young people now go to university. Although that may seem like a long way off for some, ensuring that they know how to budget, pay bills and understand their banking is hugely important. This keeps them safe, financially stable and happy. ¼ of parents find it difficult to talk to their kids about money. But, the earlier you start the conversations, the more financially literate they will be, and, with a bit of luck, the sooner they’ll move out!
3. To help them get more for their money and save some of it too!
The sooner kids learn about money, the sooner they can be savvy about it, and look out for deals, vouchers and discounts. Financially confident kids and teenagers are able to go into adulthood with some savings and know that they’re making a bit of interest on it too.
4. To look after their mental health
Money problems, a lack of financial freedom and a lack of understanding around money are massive drivers of stress and linked to mental health problems. Girls and women, particularly, demonstrate a lack of confidence in their finances, with only 30% of women having clarity and confidence over their future financial plans. Teaching girls to be financially confident will go a long way to ensuring financial equality for women in the future. Financial literacy, financial capability and financial resilience are all key factors in ensuring financial health. The sooner we teach the next generations about this, the better. Mind has some great tools and resources for managing your money and improving your mental health
5. To help them stay safe online
The internet is filled with scams and get quick rich schemes. Teaching children about money and the risks of these schemes will help to protect them online. For example there has been a huge growth in pyramid schemes in the last few months. Pyramid schemes are illegal in the UK and essentially funnel all earnings to the top, you can find out more and how to avoid them here. With moves towards a cashless society and an increase in online shopping, protecting your passwords and online banking is also more important than ever. The Money Advice Service has some useful tips on how to protect yourself online.
The sooner we teach our kids how to manage money, the better! But that is always easier said than done; teaching money management can be scary, especially when you’re not even too sure yourself. Will’s masterclass with Maji can provide you with all the answers on how to go about addressing the problem. “Your kids’ future financial wellbeing will be determined by the money habits they form, let’s make sure they form good ones” (Will Rainey)