June 24th, 2022
How to help your kids become more financially savvy
As “My Money Week” has just passed, now could be the perfect time to initiate healthy financial conversations with your children.
My Money Week, an initiative by Young Enterprise, aims to teach children aged 3 – 19 about financial matters.
My Money Week helps teach children key financial lessons they can take into adulthood
Since 2009, My Money Week has provided both schools and parents with resources that can help children of all ages learn key financial lessons, including:
- How money works, in basic terms
- How to manage money
- The importance of good financial habits.
As a parent, My Money Week may be a welcome addition to your annual calendar. Indeed, research published by MoneyAge shows 9 in 10 children between age 11 and 18 have “limited” knowledge when it comes to money.
Although we may not always like it, money is part and parcel of our wellbeing in today’s society. When young adults go out into the world, either to attend university; start an internship or apprenticeship; or dive straight into the world of work. Whatever the case, they need to understand the importance of financial management.
You may want to give your young family members ample opportunities, but it’s also vital to teach them the value of money, and instil them with the confidence they will need to take care of themselves when they leave home.
So, it could be wise to start teaching them these crucial financial lessons as early as possible.
Here’s how to make your kids more financially savvy.
Be honest about how much things cost
For some parents, talking about money in front of the children is considered “taboo”. After all, kids should enjoy their childhood, without taking on the financial worries of their parents.
While this sentiment is certainly true, it could also be constructive to be more honest with older children about how much life costs. This is not in order to burden your children with your financial stressors, but to establish an open conversation about money, and its importance, in your household.
For example, energy regulator Ofgem increased its energy price cap by 54% in April. The Guardian reports that, for 22 million households who pay via direct debit, this increase will amount to an average annual bill of £1,971 for gas and electricity.
Plus, according to the Office for National Statistics (ONS), inflation increased to 9.1% in the year to May 2022, leaving many families worried about how they might afford their desired lifestyle this year.
If you are concerned about how these price rises are affecting your financial situation, it is important to let your older children know what’s going on.
If you initiate honest conversations about the rising cost of living, your children could become more empathetic to your areas of financial stress. Plus, they could be encouraged to pay closer attention to financial news in general.
Rather than shielding your older children from the world of wealth, chatting openly about areas of financial concern might help them be better-equipped to handle their own money in future.
Use online tools to help your kids understand the value of money
The truth is: most kids will find the subject of money quite boring.
Luckily, one of the advantages of My Money Week is that there are plenty of accessible online resources available for children.
Apps such as Zogo, a child-friendly money app that offers educational quizzes on all matters financial, can help children engage meaningfully with the subject of finance.
Using Zogo, or a similar app, your children can earn vouchers for stores like Starbucks or Amazon by taking modular quizzes on different financial subjects, such as:
- Credit reports
- Saving money.
By engaging with your kids in a way that interests them, such as using online resources, the subject of money could go from being “boring” to “fun” very easily. Plus, as many parents will know, offering rewards like store vouchers is usually a fantastic incentive for learning!
Introduce your young adult kids to your financial planner
When your children approach adulthood, it’s time to take things a step further. Helping them to understand how money works is one thing; teaching them to apply their skills and prepare for adult life is another.
One constructive move you can make to improve your children’s savviness is to introduce them to your financial planner.
Your financial planner could help your children prepare for crucial milestones, including:
- Receiving an inheritance
- Buying their first home
- Paying off debts, including student loans
- Starting and paying into a pension
- Opening savings accounts, such as a Lifetime ISA (LISA)
- Paying tax and National Insurance contributions (NICs) for the first time.
By establishing this relationship early in your children’s adulthood, they can turn to your financial planner for guidance throughout their lives.
In addition, if your children begin earning more as they become established in their careers, they can begin to build their wealth with a trusted confidant by their side.
Get in touch
For guidance on the cost of living crisis, family financial planning, or any other matters concerning your wealth, get in touch.
This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.