How to have the ‘savings talk’ with your children
For most children, discussing savings with their parents is an abstract concept. Add pensions to the mix and risk losing their interest entirely. However, with people now expected to work well into their 70s, saving for retirement from an early age has never been more important. Research from the Money Advice Service revealed that money habits as an adult are set by the age of seven. Proof that adults can help establish a solid financial foundation for their children’s future at an early age.
In light of this, here are some tips for parents to help kick start conversations with your children and protect their financial futures:
Strip it right back to basics
According to research, 57% of parents think that they are the biggest influence on the development of their children’s money skills, yet over half find it challenging to talk to them about financial matters.
But it doesn’t have to be difficult. Simply talking about household finances in front of your children on a regular basis is a great way to normalise things and show them the thought process behind saving. This could be as simple as openly discussing something you are saving for, such as an upcoming holiday.
Make it fun
Educating children about money matters and savings should be a gradual and, where possible, a fun process. Don’t overwhelm them with long and serious chats. Look for engaging and interactive opportunities to grow their familiarity with money and savings. For example, giving them a piggy bank or playing money specific games such as Monopoly.
Take them to the bank and open them an account
Although many parents may already have a savings account set up for their children, not everyone involves their children in it. This is a missed opportunity, as managing the account with them will give your child an exciting opportunity to set certain financial goals, and watch their money grow.
(See YourMoney.com’s guide to choosing a children’s saving account)
Give them a glimpse into your own financial future
A good opportunity to start having more serious conversations about saving for retirement with your children could be when they start their first job, or receive a pay rise. At this point, you could explain how retirement investments work and the different options they have available to them, using your own retirement plan as an example.
Walk the talk
Children subconsciously pay more attention to what you do than what you say. So, actively show your children how sticking to a certain budget, avoiding debt and investing for the future will help achieve their financial goals.
When it comes to financial matters, as a parent, you can have a tremendous influence on your children and help them establish good saving habits from a young age. Anything that helps raise a family’s financial awareness will make a positive contribution to both adults and children alike.
David Bird is head of proposition development at LifeSight, Willis Towers Watson’s Master Trust