Rebecca Tully talks about money with her nine-year-old daughter when they are making decisions over what to buy and what not to buy.
“There’s a point at which they just want stuff and they’re just going to keep wanting stuff and you can’t really keep them out of that. I think it’s important to talk about the fact that that stuff has value and it doesn’t come out of nowhere.”
She started early, introducing her daughter to the concept of money at around the age of three, using Mini Milks as a proxy. “I remember saying this is worth X number of Mini Milks and it got bigger – how many Mini Milks houses were worth and so on.”
Most adults leave it until they start giving their children pocket money – at around eight years old – according to the Money Advice Service. That, they say, is too late because children are already starting to form money habits by the age of seven.
Fiona Montgomery of MyBnk, a financial education charity, says: “Parents agree that they are the biggest influence in developing their children’s money management skills, but admit that they find it difficult to talk to their child. So it’s really important to start those conversations.”
She understands that lots of adults feel that children shouldn’t have to worry about money. “It’s the challenge of nurturing positive money habit behaviours into lifelong habits, rather than just avoiding it and then their child not knowing, or (picking) up bad habits, and later in life that’s a lot harder to rectify.”
Needs and wants
The most important thing is to be positive when talking about money. She says: “If you start (by saying) ’Money doesn’t grow on trees, money is tight’, that is the mind-set your child will grow up with.”
Instead, she says adults should talk about saving up for things, or pointing out that they need to pay bills first because it is important for them not to be in debt.
She says it is helpful to discuss ’needs’ and ’wants’. “We need these things therefore we have to prioritise them. These things are ’wants’ – if we can save, or if we can afford them, then we might treat ourselves to these things.”
If families can afford it, pocket money can be a practical way to make children manage their own money. Fiona suggests giving pocket money from a young age, around four or five years-old.
“If they’re getting a regular amount, then they’re able to learn how to manage it; it can help them learn how to save, how to budget. What’s really important is learning from their mistakes, understanding the consequences.”
She says parents can open a bank account for children aged seven and over. “That’s setting your child up for the future, but also they know they have an account there, and they know how it works and the purpose of it.” The adult can then encourage their children to save, by offering to match what they put aside.
Above all, she says adults should make learning about money fun. Fiona recommends getting children to help plan a shopping trip, working out a budget, and estimating costs. “Get them involved in it. Looking at different brands is a way that you could save money. So they actually start to understand it and learn how to budget; rather than just saying ’No, put that back’.”
Values are key
Conversations about money do not need to be purely materialistic. Rebecca says she talks to Ivy about why it’s worth paying more for Fairtrade goods. “So I talk about the person at the other end getting a good amount of money.”
The Archbishop of Canterbury’s Just Finance Foundation set up LifeSavers, a financial education programme for primary schools, to get values back into the discussion about money.
Paul Hackwood of the Just Finance Foundation says: “We talk about wisdom, contentment, generosity and what we do with our money; what is it to be thankful for what you have; and about justice and how we should use our money.”
He says adults have a role in helping their children develop good habits around money. “It’s being prepared to talk with children about money, so that we stop turning it into a taboo that can only be talked about when it’s too late. And we take away the shame of talking about money and hopefully talk about saving, because that’s what gives people some proactive control over their finances.”
The key, he says, is to start saving early. “I don’t think it has to be a threatening or a frightening thing. It’s really about values and a positive view of money’s place in our lives.”