By David Rowsell, head of Money for Life Programme, Lloyds Banking Group
Parents are their children’s first financial educators – teaching them how to spend or save and how money is earned. Financial behaviours and decisions – both good and bad – have a powerful influence on children’s financial attitudes and behaviour around money.
Recent reports, compiled by family welfare charity, Home-Start, have found that around a third (31 per cent) of adults believe it to be inappropriate to include children in general discussions about money. A similar number (28 per cent) fail to converse with their children about career aspirations, pointing to a potentially worrying trend.
Children’s aspirations for their future have been the focus of recent government policy initiatives, with particular attention placed on ‘raising aspiration’. It is important that children are prepared for understanding how money is earned and spent. Recent changes to University funding and student finance indicate greater need for a more advanced appreciation of how to manage money at a younger age – including sharing advice on varying sources of funding and opportunities to earn money at different life stages.
In its Money Talk report on adults’ and children’s views on talking about money, Home-Start recommend that parent’s never keep children in the dark when it comes to money. Parents should inform children how they might manage their finances and give them insight into how to pay bills, save for holidays , pay for food etc. Parents must be as open as they can and not make money a taboo topic.
In a recent YouGov survey we found that children are more financially aspirational than parents believe. Around a quarter (24 per cent) of parents believe their children want to ‘earn as much money as possible’ against 41 per cent of children who want to do so – children actually favour working in a job they love when they are older, with 71 per cent of children (aged 5 – 15) indicating that to be the case. Showing there is a desire, and need for families to converse more about work and wages.
Helping children with their understanding of money can start as simply as involving them in guessing the cost of day-to-day items like food, drinks, and treats to help them get a sense of the value of the things money can buy. Parents can take this further by creating a money chart to show the costs of things they use every day – clothing, toiletries, etc. so they can begin to get an appreciation of the cost of living.
It is vital that children have the knowledge and information of financial concerns of ‘the grown up world’ before they enter it. The Money for Life programme is one of the key ways we at Lloyds Banking Group help deliver our public commitment to help Britain prosper.
Through Money for Life we encourage financial education across all age groups by delivering money management mentoring to young people and adults, and have a specialist programme through Home-Start dedicated to teaching families how to communicate better about money matters.
Programmes like these, in addition to recent inclusion of financial education to the School curriculum in England, have become imperative to closing the information gap on family finances, and encouraging parents to not only communicate with their own children about money, but to also to discuss and encourage greater communication among their peers.