If you find it hard to talk about money, here's your chance. Talk Money Week will take place from 4 to 8 November 2024, and this year's theme is "Do One Thing."
That’s one thing to trigger a financial conversation, one thing to help your kids learn more about money or one thing that helps them on their path to financial literacy.
Why do we need to talk about money?
Money plays an important role in our lives. As adults, money troubles can impact everything from stress levels to relationships. They can even affect our ability to rent or buy a house. For this reason, it is crucial that we all talk to our children about money and money management.
Louise Hill, co-founder and CEO of GoHenry, agrees, “Parents today can't afford to sweep conversations about money under the carpet. If children can't talk about these topics at home, they will get their information elsewhere – social media, television, or friends. The reality is all kids need a solid financial education to help them successfully navigate their future, from paying off their student debt to understanding taxes and even buying their first home. Money confidence comes from knowing they can talk about money so they can fine-tune practical financial skills from a young age.”
Lisa Davis, Senior Policy and Propositions Manager at the Money and Pensions Service, agrees: “Research by the Money and Pensions Service (MaPS) shows that money habits start to form between the ages of 3-7. At MaPS, we also know that financial education and talking to children about money makes a real difference. It makes children more likely to feel confident about managing their money, be active savers, and have positive attitudes towards money. Additionally, 88% of young people aged 7 –17 say they would go to their parents if they needed advice about money, so it’s crucial that parents are well-equipped to have this conversation..”
Savings
Do one thing: Discuss the importance of savings.
Ways to talk about it: Understanding why you need to save money is a crucial life skill. Speak to your child about why you save and what interest is, being sure to explain how saving a little each week enables you to pay for things you want, such as a holiday, new clothes, or emergencies—for example, when something goes wrong in the house.
Why it works: Our research shows that nearly half (49%) of UK kids and teens don’t know what ‘interest’ is and what it means for their money, which is not good for their future finances. By showing your child the importance of regular savings, you can show them how quickly their money can accumulate and grow.
How to do it: Use a savings app or savings account. If you have GoHenry, all you need to do is go to savings on the GoHenry app with your child. Press Add Goal and set a target amount (if they have one). We’ve also launched our new Plus membership option (terms and conditions apply), which allows kids and teens to now earn 4.5% AER variable interest on their GoHenry savings.
Earning
Do one thing: Talk about the power of earning.
Ways to talk about it: Be sure to make the correlation between working and earning to your children. This is especially important with young children, who often think money grows on trees. As children get older, expand the conversation to discuss the importance of earning money and ways you can do that - e.g. chores; odd jobs; side-hustles.
Why it works: Giving your child a way to earn pocket money can be an effective way to help them make the correlation between work and earning. Research from the Money Advice Service shows many parents want their children to know that they need to work to earn money and that money isn’t limitless.
How to do it: While one size doesn’t fit all, chores coupled with pocket money, alongside entrepreneurial experiences in the community such as babysitting, show children that they have to work hard for money. Introducing children to the experience of earning their own money via chores can also help children see how different jobs pay different amounts. Our latest Youth Economy Report shows that the majority (77%) of GoHenry kids top up their funds by doing chores around the house, with homework, vacuuming, reading, and feeding pets amongst the highest-paid.
Spending
Do one thing: Show them how to delay gratification.
Ways to talk about it: With small children, help them understand delaying gratification by asking them to wait when they ask for a snack or treat at home. This teaches patience and the ability to work towards long-term goals. With older children, explain the differences between needs and wants. They want new trainers but need school shoes; they want to spend all their pocket money now but need to save for Christmas.
Why it works: Learning to delay gratification is essential to money management. It helps kids understand bigger money messages, such as financial choices and the importance of saving, and it’s also the basis of financial planning.
How to do it: Children and teens don't have the same impulse control as adults, so they will always have trouble waiting. Help them see the benefits of delayed gratification by setting long- and short-term saving goals with them. This way, they can see how quickly money accumulates if you are willing to wait.
Budgeting
Do one thing: Explain the importance of budgeting.
Ways to discuss it: Show them your household budget so they understand how money is allocated.
Why it works: Talking to your kids about budgeting helps them develop essential life skills like money management, decision-making, and self-discipline. By understanding that you must balance income and expenses, children learn the value of money and the importance of saving.
How to do it: Create a budget with your kids and show them how tracking spending allows you to plan for fixed and variable expenses, such as bills or groceries, versus entertainment or dining out. Use visual tools like jars or an app to make budgeting come alive. Encourage them to talk about the allocation of money so they can learn to make their own financial decisions. By seeing how money is divided between essentials (needs) and discretionary spending (wants) within a budget, kids learn the importance of prioritising and living within their means.
Giving
Do one thing: Have a conversation about giving.
Ways to talk about it. Use real-life examples that feed off everyday encounters. For example, discuss the food bank collection point at the local supermarket, charity adverts on TV, and why people donate to charity shops.
Why it works: Talking to your kids about giving helps foster empathy, generosity, and social responsibility. It teaches them that their actions can positively impact others and encourages them to think beyond their own needs, cultivating a sense of community.
How to do it: There are many ways to give, and it’s important for your child to know that giving isn’t always about money. It can be about giving your time or skills to help someone else or donating toys and clothes no longer needed to charity shops.
Encourage your child to think about something they care about, whether animals, other children or the environment and help them find a charity they may want to donate to regularly.
You can get free resources on how to talk to children about money at MoneyHelper.org.uk.
GoHenry Interest Savings is provided by Bondsmith Savings Ltd, authorised by the Financial Conduct Authority.
