When it comes to talking to our kids, money can be a tricky topic to approach. So how many of us are really doing it?
At ClearScore, we think that talking about money openly and honestly can really help. It can help solve problems with your personal finances, and it can also help others avoid facing similar problems in the future.
This is especially true when it comes to young people. According to the Money Advice Trust more than a third of 18-24 year olds have debts of almost £3000. With an increasingly uncertain economic climate, the chats we have about money with our kids, are going to become more and more important. And by talking about finances early, it could help to prevent these issues in the first place.
But discussing money with teens can be a really daunting prospect, but it doesn't have to be. So we wanted to see how many of us are actually having the ‘big money chat’ and by working with The Money Charity, how we can bring that number up. Here’s what we found:
We don’t tend to discuss financial matters with our teenagers
In fact, our survey showed that only 32% of parents have talked to teenagers about the importance of credit and finances.
In fact, finances were one of the lowest on the list when it came to ‘chats’ parents were having with their teenagers. Good manners came out top, with 67% of people saying they’ve discussed this with their teens. This was followed by staying safe online (58%) and the dangers of drugs and smoking. According to the survey, less than a third (29%) of parents worry about their teenagers getting into debt, perhaps explaining why it's low on the list. But even if we aren’t talking about money, young people are certainly thinking about it.
So if people aren't talking about it, why does it matter?
Research earlier this year showed that 15-17 year olds were planning to take out an average of £1,891 the month after they turn 18. But that only one quarter had thought about how they’d pay it back.
While credit can have its advantages, for those that are unprepared, problems can quickly spring up. Accidentally racking up lots of debt early in life can have a knock-on effect that stays with you for many years.
So we've teamed up with The Money Charity to start reaching out to teenagers across the UK by helping to bring financial education into schools with a series of school workshops. We're also hoping to encourage parents to chat openly with their teens about money. Stephanie Hayter, Acting CEO of The Money Charity, commented: 'Having the skills to manage money effectively, use it to reach your goals, and avoid problem debt is an important part of being able to live a happy, stress-free life as an adult.’
Taking time to discuss money with your kids can help make sure they make more informed decisions and will help set them up for future financial success. Afterall, if you've never really discussed the topic, making those complex financial decisions can be really difficult.
Top tips for kicking off a money chat
Talking to your kids about money is never easy, but the earlier you can do it the better. The moment teens turn 18, their financial lives start, so it can be good to get in early. That way they can begin to build up healthy habits and mindsets that could prove beneficial in the long-run.
It may be easier to prepare what you’re going to say before jumping into the conversation. One good way to frame the discussion might be to talk about how to avoid embarrassing moments, such as your debit card being refused in front of friends. It may be off-putting to launch straight into a discussion around pensions and cash flow, but starting with topics applicable to their daily life can be more relatable and engaging.
It may also make sense to offer small tips as part of your everyday life. For example, next time you pay with a credit card, explain that it’s borrowed money and how you plan to pay it back. Either way, it’s really important to listen, as well as talk. Make your money chat a conversation, not an interrogation.
Some good topics to cover include:
- How to budget (and why it's important)
- How to get into a savings habit
- What credit is, how you pay it back, and any traps to avoid
- Your credit score and report
We’ve got a whole article that covers the key money topics that you may wish to cover, so check that out for more in-depth information on how to discuss all things money.