Research by the Monetary Advice Service shows that almost half of parents fail to talk on a regular basis about money with their children, leaving them unequipped to deal with financial issues later in life. Those 52% of parents who do discuss money matters with their children, perhaps leave it to late and many still find conversations awkward.
Do you discuss money with your children?
When should you start to teach your child about money?
Eight years old is the age when most parents start to talk to their children about money, according to surveys carried out by the Monetary Advice Service (MAS).
This typically falls broadly in line with the time when children start to receive pocket money so it becomes a practical exercise for the child to start to take steps in:
- Understanding the value of money
- Differentiating between wanting something and needing something
- Saving their money for something they really want
- Borrowing small amounts of money from parents to be paid back at a later date, and
- Sharing money with siblings, if appropriate
Further research though suggests that children have actually began to form habits linked to the way they view and handle money by the time they have reached seven years old.
Are parents leaving it too late to start these important life lessons for their children?
Why parents don’t talk “money” with their kids?
Only 52% of parents have regular conversations with their children about money. This leaves almost half the parenting population having either just some conversations or none at all.
Many parents when being interviewed said they found talking about money with their children difficult.
One key reason that conversations are avoided is the perception that children shouldn’t need to worry about money. Other reasons were linked to parent’s feeling unconfident and unequipped to bring up the subject for fear of not knowing how to address this important issue.
Why it is so important to teach children about finances
The financial world is rapidly changing, which is why the need to equip the next generation with solid financial skills is even more important than before.
If children can learn the basic skills linked to saving money, careful spending of money as well as budgeting then they will be in a better position when they become financially independent.
Especially as we now operate largely with “invisible money”, with spending largely taking place on credit and debit cards as well as online, the lessons of handling money have an added challenge for children to understand from a young age.
Practical tips for you and your children
- Visit the ATM and explain that this is where cash is drawn. However, explain you have had to work for the cash to be available and it means that by drawing some there is less to spend another day
- Visit the supermarket and get your children interested in comparing prices to find cheaper options. This will teach the lesson that it is possible to shop around and get better value for their money.
- Show household bills to your children so they can see that things like electric and water have a cost. This encourages them to be efficient with usage too.
- Prepare a simple budget with your children, listing out the key costs you incur in the house and how much of your income this represents.
- Include your child in an online shopping exercise, to demonstrate how to shop safely online by reading reviews and ensuring money won’t be wasted on a poor choice.
Creating an open channel for children to communicate about financial issues has been demonstrated to help them in their adult years be mindful and responsible with money.
Dental & Medical Financial Services provide a holistic approach to family finances. We recognise many doctors and dentists have children and this may be something of practical use or just a reminder to keep conversations about finances on the radar in your household.
Tel: 01403 780 770