But at what age should you talk to your children about money?
The key is to start early. Research shows that many children have already developed a good understanding of money before the age of seven. Learning about the value of money through financial education, and the benefits of saving can help the next generation to make smart decisions in the future.
Understanding the value of money
At a young age, it can be beneficial for children to be exposed to smaller spending habits. Whether it is learning to stick to a budget, or counting the change in a shop, these habits can help children to develop money management skills.
Many parents choose to give their child a weekly allowance, or ‘pocket money’ so that they can choose how to manage their own money. Recognising the cost of an item, and the length of time it can take to save helps children to understand the value of money.
It’s important to talk about choices. Whilst children are still young, they should have the freedom to make decisions with their money – even if it is a small purchase which they may later regret. It can help children to understand the value of saving, and waiting, in order to achieve a greater reward in the future.
Future steps
At EFG Harris Allday, our Junior Stocks and Shares ISA is a popular option for those looking to invest on behalf of their children. A parent or legal guardian can open an account on behalf of a child under 18 and invest up to £9,000 per year tax-free. Starting early allows the opportunity for funds to grow over time.
It is important to ensure that children understand the value of money. Once a child turns 18 they will be able to access their JISA investments and choose how the funds are spent. Research shows that financial education helps children to save, and to be more confident when it comes to managing their own money. It can also help young adults and students to manage their income.
By learning positive financial habits, they may choose to save and put their money towards a larger purchase in the future, such as further education or their first home.
You can access further information and resources for Talk Money Week on the Money and Pensions Service website at: www.maps.org.uk/talk-money-week/
Investments can rise and fall in value, and you might get back less than you invest.