Do you talk to your children about money? Here’s why you should

Money can be a sensitive topic. So it might be tempting to avoid discussing your finances in front of your children. But the earlier children develop positive money habits, the easier it will be for them to avoid getting into problem debt in the future. In fact, both you and your children could benefit from being more open about money.

In 2016-2017, the Money Advice Service (MAS) ran a pilot project in Wales called Talk, Learn, Do. The project aimed to help parents of 3-11-year-olds talk to their children about managing money. The parents involved reported feeling more confident in talking to their children about money a year after taking part in the project. What’s more, they were also less likely to be in problem debt themselves.

4 reasons why it’s good to talk

kids and money

#1 Help them learn good habits

Children begin to form habits around money before they turn seven. Modelling and encouraging positive behaviour helps your children develop the skills they’ll need to budget, save, and manage their own money as adults.

#2 Do your bit to end the gender pay gap

The gap between how men and women are paid is well known. 78% of companies in the UK pay men more than women, on average. The reasons for this are complex. But there’s certainly no reason for young girls to start life less confident about managing money than boys.

Yet a survey this year found that around two thirds of girls aged 5-10 said they didn't understand money - compared to just over half of boys. Girls were also more likely to think of themselves as bad at handling their pocket money.

Whether you have girls, boys or both, help them get a head start by encouraging them to feel comfortable talking about money.

#3 Get less hassle in the toy aisle

After completing the pilot project, parents found that their children were more able to differentiate between things they needed and things they wanted. Parents also felt more confident in giving their children pocket money, rather than buying them treats, and encouraging them to save or spend it themselves. Families were also more likely to discuss the impact of TV advertising. This helped children recognise when they were being manipulated into wanting a product they didn’t need.

#4 Improve your own finances

A year after the pilot project, the parents involved were less likely to be in problem debt. One couple said talking to their children about responsible spending had provided a ‘reality check’ about their credit cards.

As a DMP customer, you’re already used to confronting your own financial situation and keeping a watchful eye on your spending. That puts you in a great position to talk to your children about managing money responsibly. What’s more, discussing money as a family can help you stay accountable and within your DMP budget.

What you can do

Encouraging openness about money is an ongoing process. MAS suggests a number of fun and easy activities you and your child(ren) can do together.

You could budget to pay for a weekend’s activities in cash, involving your child in handing over the money and counting change. Or give your child a lunch box budget, and let them help choose what goes in it. Or for younger children, simply play shop.

Any or all of these will help your child understand how money works. Check out the MAS website for more ideas. And have fun!

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