How to talk to Teenagers about money
The right financial education can make your children feel more confident about money so, when they are older, they have the knowledge and skills to meet their financial goals.
Often, managing your wealth effectively is about developing positive habits such as regular saving and living within your means. Fortunately, you can instil these habits in your children from a very young age.
As they get older, you can then build on that foundation by helping them expand their knowledge, so they understand how taxes and debts work, and how they may be able to invest their wealth in the future, for example.
Even as adults, they may need advice on buying their first home or choosing the right protection cover. You may need to discuss intergenerational wealth planning with them too.
Ultimately, having these conversations as a family can benefit all of you. Yet, many people shy away from talking about money and you may be unsure how to start the conversation.
You lay the foundations for adulthood during your teenage years, and learning how to manage your finances is a vital part of this.
Indeed, according to the Young Person’s Money Index, 82% of young people want more financial education and 70% feel anxious about money due to the cost-of-living crisis.
The good news is, you can teach them what they want to know and help them feel more confident about money simply by having more open conversations.
Some of the main things you might discuss include:
-
Description text goes hereSharing details of your own finances with them is a good place to start. By showing them how much you earn and what your outgoings are, they can get a sense of how money works in the real world. You can also demonstrate why good money management is key to meeting financial obligations and working towards long-term goals like saving for retirement.
If you don’t feel that it’s appropriate to discuss the details of your finances with your children, you could always use an example, with assumed income and outgoings instead.
-
Description text goes hereMany people have their first job as a teenager, which brings financial independence for the first time. But they may need some help understanding their
payslip and key information on it, such as National Insurance (NI) and Income Tax deductions.
You may also want to give them some advice on what percentage of their wages to put into savings each month.
-
Description text goes hereDeveloping a good relationship with debt from a young age is incredibly beneficial. To help with this, explain the difference between good and bad debt, how interest rates work, and when borrowing is the right option.
Taking out a student loan is often the first time that your child will have personal debt. As such, it may be useful to bring your teenager
to speak with your adviser about the loan so they can understand what they are borrowing, how the interest is calculated, and what the repayments are likely to be.
A real-world example like this could be an effective way for your child to learn exactly how debt works and why it can be a useful tool.
By learning these lessons now, your child may be more likely to make borrowing work for them and avoid excessive debt in the future.
-
Investing may be an important part of your child’s financial plan when they are older, but it can be daunting if they don’t understand how it works. Fortunately, you can help them get started now, so they feel more confident managing their own investments later.
You could open a Junior Stocks and Shares ISA for them and encourage them to contribute a
small amount each month. Matching their contributions and showing them how to choose different investments is also a good way to engage them in the process.
Consider starting a pension for them and making contributions too, so you can kick start their retirement savings and teach them the importance of long-term planning.
3 top money Subjects Teenagers want to learn about
Financial products like mortgages, loans, pensions and credit cards
How taxes work
How student loans work
Talking to your children about money is one of the best ways you can support them in building their own financial plan.
When they reach their teenage years, you can build on this knowledge as they start earning their own money. Helping them get started with investments and saving, and letting them see how you manage your own finances will stand them in good stead as they approach adulthood.
If you need more advice on how to help your children at each stage of their life, get in touch with your us today.
Sources:
Young Person’s Money Index The London Institute of Banking and Finance.
2022 Gen Z investment report Royal Mint.
Majority of parents yet to discuss will with adult children, study reveals MoneyAge.