Talking openly to children to form good lifetime money habits
Along with the rest of us, children’s lives changed beyond recognition at the start of the pandemic. The regular routine of school life, hobbies, celebrations and even dreaded exams were gone overnight. How can we begin to quantify the effect this may have on children? One survey asked children what had made them feel stressed during lockdown and discovered money worries featured, together with concerns about schoolwork, family life and other causes1.
Whilst it is upsetting to think that children feel these financial stresses too, with many families impacted financially, it’s probably inevitable. The question is, how to deal with it? Talking openly about finances has been shown to help people feel less stressed or anxious, more in control, have stronger personal relationships, as well as helping children to form good lifetime money habits.
Teaching the basics
Now is an especially good time to teach your kids some basic financial facts to help calm their fears. Talk to them about your household budget and explain the main financial terms, such as credit and debit. Teach your children about the basics of savings, Premium Bonds, ISAs, JISAs, and pensions. Another valuable lesson is to show them the value of paying small, regular amounts into products like a savings account or JISA, where savings can quickly add up.
Don’t be afraid to say ‘no’ to your children if purchases seem unnecessary, as they need to learn about the balance between your financial needs and theirs. Involving them in purchasing decisions is all good experience too, so they get an understanding of how your thought processes and considerations have led you to make wise financial decisions.
The pandemic has shown us that having our finances in the best shape, with a sound safety net to fall back on, is vital. Habits formed now can help to set your children up for a positive financial future.
1Children’s Commissioner, 2020
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. The value of investments and income from them may go down. You may not get back the original amount invested.