Post by Harriet Shepherd, Marketing Propositions Manager, Workplace Financial Wellbeing, St James’s Place.
Financial education is one of the most important lessons to teach children and the current climate provides an excellent opportunity to start the conversation.
While schools will play their part in teaching the concepts of budgeting, saving, investing and giving back, there can be plenty to learn at home – life skills that will set the foundations for thinking that will last well into the future.
By teaching children early about how money works, they can develop their understanding and ultimately learn how to plan for their future.
Start Investing Early
Taking small steps by investing little and often from an early age can make a dramatic difference to a young person’s future, giving them a head start towards financial security. For example, investing £5 a day, into a pension, up to the age of 10 can lead to a £1m+ investment by the age of 651, taking compound growth into account.
Or, a smaller amount of 50p a day could return £100,000 over the same period. The important thing is to start investing as soon as you can so that your money has plenty of time to grow.
Make Learning Fun
Parents have enough on their plates, particularly with the added pressures of lockdowns and home-schooling. However, there are a number of fun, quick and simple ways to start teaching children about money.
Virtual games-based lessons are often free and can include everything from budgeting and saving, to risk and reward, the basics of investing and how interest works. These programmes can help young people be better equipped to make smart financial decisions when they are older.
Lead By Example
Ensuring people have the ability to plan, grow and protect their financial future and achieve financial wellbeing in a world worth living in is so important. It is equally as important to be able to share and teach these skills to our children, so they can grow up with a sense of confidence towards money and know how to make informed decisions throughout their lifetime.
Educating young people about the advantages of budgeting, saving, investing and giving back is a life skill that needs to be taught early on. In doing so, we can all take a moment to consider whether we are leading by example with our own finances and, if not, see where the opportunities are to make adjustments.
Increased Emotional And Financial Support
It’s likely that your children will need extra support during these unprecedented times, whether they are young and home from school, or older and back from university.
Thinking about money as a family is a great place to start and has the added benefit of introducing younger generations to financial planning. The impact of coronavirus can prompt us to teach young people important life skills such as how to adapt to current circumstances and avoid financial strain, while still saving for the future.
Set A Goal
Whether it’s buying a first home, paying for further education or travelling the world, setting a goal and putting money away to save for this early on in life can make it achievable. The longer the investment has, the greater the benefit will be from potential year-on-year compound growth of reinvested returns. For example, investing £200 a month into an ISA for five years can grow to over £13,0002.
It is hugely empowering to take control of the elements of your life that you are able to, particularly at the moment. Giving your children the tools and skills they need to manage their money in the future can help to set them up for the years ahead for a life of financial wellbeing.
For further advice and tips, visit https://www.sjp.co.uk/about-us/corporate-responsibility/young-people-financial-education
1 Assumes an annual growth rate of 7% net of charges. This figure is an example only and is not guaranteed. What you get back depends on how your investment grows and the tax treatment of the investment. You could get back more or less than this.
2 Assumes an annual growth rate of 5% net of charges. This figure is an example only and is not guaranteed. What you get back depends on how your investment grows and the tax treatment of the investment. You could get back more or less than this.
