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29 Jun 2022

5 easy ways to talk to children about money in the tough financial climate

5 easy ways to talk to children about money in the tough financial climate

The cost of living crisis is prompting many parents and carers to discuss finances with their children.

While the squeeze on household budgets is meaning many parents have to make tough decisions about how to stretch their money further, it could also be seen as an opportunity to help children understand more about saving and budgeting.

Nearly four out of 10 parents (37%) say they are more likely to discuss finances with their children as a result of skyrocketing costs, according to a new survey from F&C Investment Trust and global asset manager BMO.

A similar proportion (36%) of parents say recent energy price increases make them more likely to talk to their children about household finances.

Saving, budgeting and debt are among the most common financial topics parents say they are discussing – with mortgages, pensions and inflation also covered.

Investing was found to be a less common topic of conversation, with only around one in eight (13%) parents saying they speak to their children about riding the waves of the stock market.

One in four (27%) parents don’t talk to their children about money – with some avoiding the topic because they don’t want to worry them.

However, some parents may be underestimating the extent to which children are already concerned about the family’s finances.

Recent research from Yorkshire Building Society (ybs.co.uk) found around three-fifths (61%) of young people aged 11 to 18 years old worry about their parents or guardians not having enough money.

By talking to children about money, parents may at least be able to help ease some of their concerns, as well as giving them confidence with their own finances.

Ross Duncton, managing director, head of marketing and direct at BMO (bmogam.com), says while schools have an important role to play in financial education, “It’s impressive to see parents using the current financial climate as an opportunity to financially educate their children on topics such as budgeting and saving for unexpected events.”

Here are five easy ways to talk to children about money in the current financial climate…

1. Talk about money when you’re out and about

“If you are out and about with young children, talk to them about what you are buying – and give them the opportunity to pay for items themselves,” says Duncton. “This way children will learn that once the money is gone, it’s gone.”

2. Play shop

“Set up a play shop using items around the home and talk about how much the items cost. This is a great way to help children see the importance of essential items and treats, and even teach them how to budget and get the best value for their money.”

3. Set up a play bank

“Set a timer and challenge children to do a simple task in exchange for some play money,” Duncton recommends. “You can give them the option of spending this at the pretend shop, or saving it. This can give you an opportunity to talk about the importance of saving up for something you really want.

“You can even talk about the things that you are saving up for, so they can see that this is something that adults do as well. Depending on the child’s age, you can also explain how it may take you a little longer for you to save for certain items at the moment, as things are costing more.”

4. Read relevant children’s books

For example, Cinders McLeod’s Moneybunny books aim to teach younger children about financial literacy. You don’t necessarily need to spend a lot of money on books – visit your library, look in charity shops or start a book swap with friends.

5. If you have older children, work together to plan meals and budget

You could even challenge each other to see who can create the most cost-efficient meal for the whole family. Duncton says: “This is a fun way to teach the importance of budgeting before they leave home.”

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