We can learn a lot from these discussions ourselves – getting the younger generation into good savings habits benefits not just them but everyone around them. It’s a win-win.
We’ve put together six ideas for talking to children about money – and some steps you can take to build their savings and their habits.
1. Start children saving earlyIt’s never too early to start bringing money into your child’s life – it stops it becoming a scary subject. Buy a young child a piggy bank and encourage them to collect a certain amount of coins in a particular time frame to help them understand the concept of saving. Choose a date, open the piggy bank and count the savings – they’ll be amazed at how it adds up.
Open a savings account in their name – having their own ‘official’ savings will give children a feeling of achievement that could motivate them to save more as they get older. Get them to choose something to save for and show them how much they’ve saved as it builds up.
Children’s savings are usually tax-free, which should keep you happy too. Older kids can usually open their own bank current account from age 11.
2. Make it ‘everyday’Don’t keep money for big serious conversations – it’s part of everyday life for everyone.
Talk about, for example, a household bill you’ve received. Then set a challenge to see if you can make the next one less, and put the difference towards your child’s savings.
Your child will enjoy the challenge and get a sense of achievement if small changes like turning lights off or putting less water in the kettle make a difference. It’s good for the environment too.
If your child breaks or loses toys or gadgets, encourage them to save up for a replacement rather than buying it yourself. This will help them understand the value of the item.
3. Pocket the differenceTaking control of your finances is a good way to focus on long-term saving.
Pocket money teaches children responsibility which can help them as adults when it comes to handling money in the real world.
The amount isn’t important, it’s more about the child learning to choose whether to spend or save.
If you let children make mistakes they’ll always remember the time they wasted their pocket money on something they didn’t really want just for the sake of spending – that’s a valuable lesson.
4. Appy daysTechnology can make saving – and spending – easier, and getting children into the habit of using money-related tech is a good way of teaching them that even when something is ‘virtual’, it still has value.
Pocket money app RoosterMoney works by parents loading it with money which children can then spend in shops, online or by withdrawing cash. Nimbl is a similar app while the Osper pre-paid card works in the same kind of way.
If your child is happy with using tech to pay, why not try a savings app? The gohenry card lets children set individual savings goals. With all of these, remember to check terms, conditions and any charges to make sure it’s right for your circumstances.
5. Practise what you preachWalking the walk is vital if you want to hand down good savings habits to children. So live your values and talk to them about saving for the future, and how you do it.
If they run out of money before their next pocket money or allowance, try not to bail them out. They will only learn how to be more careful if they have lived the experience of not having enough for what they want.
6. Get them off to a good startIf you have children of your own, you can help give them a good start with their long-term savings goals now.
Parents or guardians can open a Junior ISA (Junior Individual Savings Account or ‘JISA’) – cash or stocks and shares – to save into as children grow up, which will give them money that they control when they are 18.
If you have younger relatives you could pay into their JISA. You can pay up to £4,368 in 2019-20 into a child’s JISA.
If you’d be happier keeping control over what the money is spent on when the time comes, you could use some of your own ISA allowance. Read more in our article What’s an ISA, who are they for and when should I consider one?
Junior ISAs replaced Child Trust Funds a few years back. You can still pay up to £4,368 into existing ones or they can be transferred into Junior ISAs, though you should check if this is right for you and be aware of any exit fees. If you can’t remember who your Child Trust Fund is with – try the government’s tracker service.
Start them long-term saving now and children are less likely to need A lending hand from the Bank of Mum and Dad when they’re older. It’s currently one of the biggest lenders in the UK housing property market.
We can all help the next generation to get started and take control of their financial future. Just having conversations and making saving part of daily life can hand down savings habits that will last a lifetime.
The information here is based on our understanding in August 2019 and should not be regarded as financial advice. Your own circumstances will have an impact on tax, and tax and legislation may change.
Pensions and Stocks and Shares ISAs are investments. Their value can go down as well as up and they could be worth less than was paid in.
Any products or services mentioned are given as examples and other, similar, products and services may be available.