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 our children and grandchildren? 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 causes.

Whilst it is upsetting to think that children can 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 and 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 child or grandchild some basic financial facts to help calm their fears. Talk to them about a household budget, for example, and explain the main financial terms, such as credit and debit. Teach them about the basics of savings, premium bonds, individual savings accounts (ISAs) and pensions. Another valuable lesson is to show them the value of paying small, regular amounts into a savings account or investment where savings can add up over time.

Saying ‘no’

Don’t be afraid to say ‘no’ if purchases seem unnecessary, as children 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 been reached so as to make a wise choice.

Be wary

We’ve all had more opportunity to shop online recently. And you may have seen in the press that there’s been a growth in ‘buy now, pay later’ firms, like Klarna and Clearpay, who aren’t yet regulated by the UK's Financial Conduct Authority (FCA). This could tempt some younger (and older) adults into spending more than they can really afford. Teach your children and grandchildren to be wary of spending money they don’t have and getting into debt.

Good habits

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 and grandchildren up for a positive financial future.

Sources:
Childrenscommissioner.gov.uk/2020/09/30/how-lockdown-affected-childrens-stress-and-anxiety
Childrenscommissioner.gov.uk/wp-content/uploads/2020/09/cco-stress-among-children-in-england-during-the-coronavirus-lockdown.pdf

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