Money habits start early

Money habits can start early in childhood. Transactions happen all around them, and they take note of how, as parents, we treat money. Parents play a key role in our relationship to money in adult life.

According to an article written by Kate Hughes in The Guardian, the financial skills of UK under-34s are 16.5% below the national average. It seems like we have a lot to catch up on, especially as financial education has only been added to the curriculum less than a decade ago.

SmartPurse’s own research found that 66% of UK parents do not believe that their children receive enough financial education, but only 1 in 10 parents actively teach their children about pension planning and 1 in 5 teach them about investing. 

How can we help our children learn the value of money?
        

It’s so important to start teaching children about money when they are young, but it doesn’t need to be complicated. Here are a few things you can do to create learning opportunities:

•  Start early! - Your child will need to know about the concepts of earning, spending, and saving as early as possible to create good lifetime habits. They can begin learning from the moment they start asking you to buy them things. This could be as young as three, and don’t be put off talking to them in a way that they can understand. Teaching them about simple transactions is a great way to start.
•  Make money moments visible - And speaking of transactions, we can show our children how we deal with money every time we buy something. Again, this doesn’t have to be complicated, we can just make them aware of what we are doing. Show them the money in your purse or wallet being handed over in exchange for what you’re buying.
•  Engage children in discussions about money - We can explain to children what we are doing with transactions, but it’s vital to also involve them directly. Even if they are too young to count change correctly it doesn’t mean they can’t think and talk about money and what it means.
•  Encourage good habits - Each time you make a transaction when you are with your child they will see your relationship with money playing out. Show them how you treat the money in your purse or wallet and as it is used to buy something it must be kept safe. It needs to be looked after so we can continue to use it well.

Above all, it’s crucial that learning about money is fun. It’s not a maths lesson in a stuffy classroom! All the good habits you are encouraging need a lot of repetition, and repetition can be boring.

So create enjoyable learning opportunities that are ultimately positive experiences. That way, money will signify abundance rather than scarcity.To learn directly from Dr Harvey for FREE, watch our webinar on teaching kids good money habits on our website. 

Investments and gifts for children
        

Giving your children the best start in life has never been so important as during a time of economic uncertainty. When we see the cost of living increasing at a fast pace, it’s high time to look at saving for the future.

 Investing for children is a simple way to secure a financially stable future for them, and you don’t have to break the bank to help them. Savings in your child’s name will receive tax-free interest (up to set limits).

Where to save your children’s money
        

Children can save up to the same amount as adults before they are taxed, so for the 2022/23 tax year that will be £12,570. You can also get tax-free allowances on top of this so a child could save up to £18,570 before being taxed. 

 The best way to save tax-free for your child is with a Junior ISA (Individual Savings Account). Some ISAs will give you interest of 2.5%, so make sure you shop around and find the account that suits you best. A child can have one Junior ISA in their name.

 The best part? Your child can’t access their account until they are 18, so while you’re saving for their future, they will learn the value of patience and planning!

 And don’t forget, there is currently a loophole for 16- and 17-year-olds. They can open an adult ISA as well as keeping their Junior one until they are 18.

Involve your children
        

Getting your children involved in saving is as easy as 1, 2, 3. Most banks and building societies have savings accounts for children from the age of seven. Visiting the bank on a regular basis with your kids is a great way to teach them good money habits. 

And if you want to save more, consider premium bonds or saving in a pension plan. Ask your independent financial advisor about ISAs, accounts, and investments to help you and your child plan for their future.

Not sure where to start?
        

There are lots of great resources out there for you to start your children saving and spending wisely.

• Dr Mara Harvey’s book series A Smart Way to Start helps parents educate their children on money matters from an early age.
• Go Henry is a prepaid debit card and app that you can put money onto from your account. It teaches kids about financial wellbeing through “Money Missions” that they can take part in.
• The SmartPurse Money School teaches parents how to talk to children about money and start them off buying and saving wisely.

Don’t forget our Summer Challenge this year. We’re challenging you to show us that finances can be fun!

Post as many pictures as you like on your Instagram or LinkedIn profiles using the hashtag #smartpursechallenge, or send your pictures no later than 31 August 2022, directly to our mailbox at team@smartpurse.com

There are great prizes to be won, including annual access to our Money School.

Ts & Cs apply.

Figure of the Week
        

The weekly pocket money of a child in the UK is around £7.58

In a survey commissioned by Barclays, children under 16 in the UK are given an average of under a tenner a week. Most have to work for it though! 

 Cash is still king for kids though, with most preferring money they can see to a bank transfer.

 Gillean Dooney, who is Head of Families at Barclays UK, said:

“If your kids are happy to do their bit around the house, pocket money is a really good way of teaching them the value of money at an early age."

Money School in the App Store
        

The SmartPurse Money School app has arrived in the App Store! Packed with independent, jargon-free financial content, our beginner-friendly app gets you clued up on your finances so you can grow your money in a community supported by experts. 

And we have a whole module on family, children and money packed with practical tools to show you how to talk to your children about money.

Download the app and start your free trial today!

Money in the news
        

Bank of England August rates increase

The Bank of England raised the interest rate to 1.75% this month, so what does this mean for homeowners? Well, it’s been the biggest rise in 27 years, so households are bound to feel the pinch. 

With the cost of living increasing in all areas of our lives, what can we do to make sure money stays in our pockets for longer?

If you’re not already on a fixed rate mortgage, it’s time to shop around. Make the most of lenders competing for your business and negotiate a better rate. This is especially true if your mortgage terms are set to renew: make sure you fight for a good deal. If you don’t, most lenders will automatically transfer you to their standard variable rate. And that could cost you a pretty penny. 

Do your homework and find the best rate before it’s too late!

Meet the expert – Jenny Maloney
        

Jenny is an FCA-authorised financial advisor with over 10 years’ experience and loves to work with families who want to focus on investing in their family’s future. She’s passionate about people reaching their financial goals and supporting them in the best way she can with the wide range of knowledge she has. 

What Jenny says:

“Whether you are interested in investing or philanthropy, I’d love to help you make a more sustainable impact with your money.”

Money Inspiration @smart.purse 

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