The government-backed Money Advice Service polled almost 5,000 children and young people aged 4–17, and their parents, and found youngsters whose parents included them in money discussions were likely to save on average 20% more than those whose parents decided how their money was spent.

Children who had no say in how their money was spent were nearly five times more likely to say that borrowing money didn’t bother them.

This group was also less likely to be confident in managing their money with only one in three saying they were confident in handling their finances.

The findings suggest parents play a key role in helping their children learn the basics of finance, with 74% of kids saying they talk to their parents about money.

Many parents, however, are cautious about talking to their children about money and giving them responsibility for money at an early age. They believe that teaching children about money should start later in childhood than the report suggests.

It said children begin to demonstrate understanding of concepts such as money having a value very early on, and financial knowledge, skills and abilities typically grow with age, with a significant step-up in understanding at age six.

Kirsty Bowman-Vaughan, children and young people expert at the Money Advice Service, said: “We know that parents might feel as though they’re protecting their children by not talking to them about money, yet helping children to understand how to save and handle money is one of the most important things parents can do to ensure their long-term financial security.

“The best ways to do this are through discussions, and allowing them to experience money and make decisions. That means talking to your children about money matters and letting them decide for themselves, in an appropriate way, how to spend money. Parents shouldn’t be afraid of starting to do this from an early age – that’s when it’ll have the most impact.”

Source: Money Advice Service