Of all the topics that I write about, ‘money’ is the one that tends to elicit the strongest and more intense reaction. Add to the current economic climate and it really is a subject that is front of mind. Here Mum to three boys, Money blogger and Head of Brand at Starling Bank Rachel Kerrone offers some great advice on how to talk to kids about money.

  • It’s widely reported that people feel more comfortable talking about their sex life than their bank balance! Money really is one of the last taboos, so it’s no surprise that many parents feel uncomfortable talking to their kids about it.

  • Many of our long-term money attitudes and habits have started to form by the age of seven, so teaching good habits and a positive attitude to money from an early age has the power to change how future generations think and behave when it comes to their finances.

  • Money is 80% emotion, 20% knowledge. The more we can understand the emotional side of our own relationship with money (simple things like daily behaviours and patterns) the more we can transform them and in turn teach our kids better habits.

  • How our parents behaved with money (whether good or bad) has a huge effect on how we manage our own money as we move into adulthood.

  • So whilst in many ways money does make the world go round, and we all need it to live on – there is a clear link between our finances and our mental health.

  • ‘This is money’ reported that 55% of UK adults are worried their mental health is being affected by money problems. And one in five people surveyed by the ‘Money Advice Service’ said they were currently experiencing poor mental health as a direct result of their finances.

  • These are frightening stats. Even more concerning is that younger people are even more at risk.

  • BUT imagine if we could turn things around. Make things different for our kids. Make money something that people are open about, feel happy and confident about, and understand better. 

  • The good news is that this is all within our control.

  • The aim of this list is to share some practical ways to start (if you haven’t already) or continue if you’re already talking to your kids about money. It’s not exhaustive, but it’s hopefully thought provoking.

  • So why start the money conversation early?

  • We know from research by the Money Advice Service, that children who are encouraged to talk about money, are given money regularly and are given responsibility for spending and saving tend to do better with money when they grow up. And GoHenry reported that during the lockdown, there has been an increase in pocket money from chores, and also children saving their money rather than spending it.

  • Money is not part of the school curriculum until senior school, and by then habits and behaviours have already been formed. However, some schools do run sessions for children to teach the basics of money. 

  • An initiative that my children’s school ran, was to give each child £1 and asked them to make it grow. They could do anything from cake sales to car washing. It taught them so many money lessons but was also a great fundraising effort for new school equipment. Don’t be afraid to suggest initiatives to your children’s school. 

  • So it’s really up to us as parents and guardians to be open with our kids about money matters – good and bad – as what children see and learn about money in childhood will influence how they manage their money as adults.

  • But how do you start the conversation?? A lot will depend on the age of your children so always make sure it’s age-appropriate. 

  • Talk about why you work. That having a job means earning and getting paid. Most kids will have seen their parents working from home first-hand over the last few months so it should make more sense than ever. Show them visually how you get paid via your banking app or bank statement, and explain incomings vs outgoings.

  • Talk about the things which are free vs the things you have to pay for. Needs vs wants are a good way to do this. A need is a roof over their heads, food to eat, running water. A want is a new lego set or a trip to the zoo.

  • Give them pocket money, an allowance or money for helping with chores. Pocket money can be a regular weekly amount or based on how helpful or well behaved they have been that week. 

  • According to Halifax, the average weekly pocket money is around £6-7 but this is a personal choice and should be based on what you are comfortable with and what you can afford as a family.

  • Explain the basics of saving. For a five-year-old this may be a money box being gradually filled, for a fifteen-year-old – a savings account which pays interest. Whatever their age, the rules are the same – the more you put aside, the more it grows. Set savings goals then they have something to aim for. When they hit certain savings goals, perhaps offer to match what they have saved or add extra to show how interest on savings works.

  • Saving in other ways is also a great lesson. Turning a light off saves electricity, buying something second-hand saves money and the planet, taking a picnic saves money on bought lunches or fast food. Make these points regularly and they will soon become a habit.

  • Talking about charity donations is another great lesson related to money. Explain why it’s important to fundraise or donate money for specific charities. Get the whole family involved in fundraising for local causes.

  • Today more than ever, we live in a cashless world. Kids see us tapping our cards or phones and often don’t understand where the money actually comes from. Show them your banking app. Let them see the money going out and the balance going down. Bring it to life.

  • Give them independence. When you shop (in person or online) get your children to help. Let them put things in baskets, pay for things, stay within a budget.

  • Setting a budget and sticking to it is a good lesson for everyone. Doing this from an early age will stand anyone in good stead in many life situations. If you can’t afford it, don’t buy it – no matter how easy it is to swipe up or double click!

  • For older children, start explaining different financial products to them and put them into context. Tell them about mortgages, loans and credit cards. Use real-life examples of when you have saved for something, had to apply for a mortgage or loan, and what you looked out for. There are also plenty of resources out there to help you with these conversations. The Money Advice Service or Martin Lewis’s financial education resources are a good place to start.

  • Research shows that young people face four major financial challenges as they reach adulthood: paying their rent, servicing their student debt, saving for a deposit on a property, and simply managing their day-to-day financial life. Investing just a small amount each month when they’re young can develop into some serious cash for when your children grow up.

  • There are lots of apps out there now, specifically designed for children and all with a focus on financial education. For pocket money management and a personalised debit card try GoHenry or Rooster Money. For a card which gives children a debit card attached to their parents, current account try Starling Bank Kite or Revolut Junior. There are lots of options from the high street banks too, but usually without the innovative features and child-friendly apps of the newer providers.

  • Last but probably most importantly – give your kids the confidence to talk openly about money. Chatting to their friends about what they’re saving for, how much pocket money they get, being proud of something they have worked for and earned.

  • 2020 has been a challenging year for us all, and YouGov data shows that money has remained top of people’s worries (even more so than health). If you are having money issues, it’s important not to hide this from your children. Hiding anxiety impacts the whole family. The conversation should always be age-appropriate, but by opening up and helping children understand those worries it will form more positive behaviours around money.

  • Your relationship with money (good or bad) and how much you have (or don’t have) is quite personal. What age we start talking to our kids about money is also a personal choice.

  • In the same way that we are opening up the conversation about other important topics – race, mental health and gender to name just a few – let’s also break the taboo around money. 

  • We really do have the power to change things for future generations

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  • Reply Shireen November 14, 2020 at 10:42 pm

    I loved this. So relevant and true. Thank you x

  • Reply Commercial Lights October 18, 2021 at 12:24 am

    This page really has all the info I wanted concerning this subject and didnít know who to ask.

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