We have to talk to our kids about money – no matter how uncomfortable it feels

Too many of us were raised to avoid frank discussions about finances. When it comes to our own kids, we have to stop the cycle of discomfort

 

Tamara Gillan
Sunday 24 November 2019 12:20
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People talk about whether or not they save money

In March 1942, an 11-year-old boy took the decision of a lifetime and invested all his savings in the stock market. The $114.75 (£89.42) he had saved since age six bought him three shares of Cities Service preferred stock. This was the beginning of a multibillion-dollar investment journey, one that would see him become the pre-eminent investor of our time. This was Warren Buffett’s first venture into the stock market.

Buffett, one of the world’s most successful investors, credits his father, Howard Buffet, for inspiring his love of investing. His father’s background in stockbroking no doubt played an invaluable role in helping to build his son’s booming empire. But there’s a lesson for all parents in this relationship – we must talk to our children about money to set them up for success in later life.

Our capacity for financial understanding is directly impacted by what we learn about money at a young age, so starting the conversation about finances early on is key to a child’s future financial success. But for many families, money is still a taboo subject. Some 25 per cent of parents say they find it difficult to talk to their children about money, and more than half of adults say they haven’t discussed their will with their family despite many assigning their money to their children.

According to the latest OECD figures on financial literacy, the UK ranks below average for financial education. Financial literacy has been included in the National Curriculum since 2014, yet young Britons are falling behind their counterparts across the globe in terms of managing their money. As parents, we have a responsibility to improve our children’s financial understanding through opening up the conversation and teaching lessons in the home.

Many parents feel ill-equipped to broach the topic with their children, or don’t know when it’s best to start. Leading banks encourage parents to start the conversation from a young age and continue it into early adulthood. By just five years old children can grasp the idea of having to purchase merchandise, making this is a perfect time to introduce the concept of money. Once they reach their teens, HSBC advises that children are introduced to the benefits of earning interest. When they reach their late teens, parents should drive home the importance of lifelong financial independence.

It’s not only children but parents too that will benefit from having these conversations. Since starting my own business, I’ve been conscious of the financial legacy I want to leave my child. I talk to him in simple terms about money so there are no misconceptions that it’s an awkward subject in our home. As he grows up, these conversations will become more detailed. Every hard-working parent should feel secure in the knowledge that their money will be in safe hands in the event of their death, and having a financially literate child is one way of achieving this.

With just weeks to go before the general election, debates about wealth, tax and government spending will only intensify. And as manifestos from the main parties fight for the spotlight, now is as good a time as any to give your children the tools they’ll need to make sense of what’s going on around them, at least in financial terms.

Last week marked the annual celebration of Talk Money Week – a nationwide effort to talk about money in a nation renowned for avoiding the topic. With initiatives like this growing in popularity, I am optimistic that we are moving in the right direction. It’ll take some pioneering parents to put finances at the top of the agenda for their children, but these families will be all the better for it.

Take a leaf out of Howard Buffett’s book and start talking money with your children. Who knows, you could inspire the next top investor.

Tamara Gillan is the co-founder of The WealthiHer Network, a campaign launched in March 2019 to make the finance industry more female-focused

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