I had a very proud “dad moment” recently.
My teenage son got his first part-time job.
I was excited at his initiative, and the responsibility he showed.
What surprised me, however, is what he did with his first couple of pay packets.
Instead of putting some of it away, he spent it all on tech gear.
I’ve asked him, and he doesn’t mind me telling you that we sat down together, and discussed how to start managing his money in a more responsible way.
We talked about some of the key things he wanted to fund over the next few years, and I showed him how his money would grow if he put away a set amount in a savings account each month.
…His ‘car saving fund’ will be the focus of his pay packets now.
If you, too, have children, there is an important lesson here.
Kids aren’t taught how to manage money at school (although I feel they should be – one for a future blog!).
They pick up money habits from you, other adults in their lives, and each other.
Most likely, no one has ever showed them how to budget.
Especially in their late teens, pressure from their friends or social media can influence them to spend disposable income on clothes and gadgets rather than saving it.
Often at that age, all income appears disposable!
But as they grow into their mid-20s, they may start earning more – and have some serious financial decisions to make.
At some point they will start thinking about buying a home. Later, they might have dependents to support.
There may also come a time when they inherit money. You might decide to give them a lump sum to help them buy their first house or invest in an ISA, for example.
But knowing how to make good financial decisions doesn’t come instinctively or naturally to most people.
If your children didn’t learn to manage their money when they were younger, they may struggle to live within their means as young adults.
And often, they just don’t have enough knowledge about investment instruments, taxes or mortgages to make the best decisions about what to do with their money.
So how can you help them?
First, if you have relatively young children, it’s never too early to discuss basic financial concepts like saving, or to talk to them about how they are going to spend their pocket money in a responsible way.
If they are older, in their 20s or 30s, they may not welcome overt financial advice from their parents.
So rather than having ‘the money talk’, you could casually send some relevant resources their way, so they can start exploring the topic for themselves.
It’s full of eBooks, videos and infographics about wealth management, mortgages and investments, and is a great starting point to help them understand and plan their finances.
Last but not least, you could gently direct them towards our financial advisers.
Most people don’t start getting professional financial advice until relatively late in life – their 40s and 50s.
But it is just as useful in your 20s and 30s, when you set the financial foundations for the rest of your life.
A good financial adviser can help your children work out their financial goals, and then show them how to arrange their finances to achieve them.
They can also talk them through any financial dilemmas they are struggling with, to put them on a firmer financial footing.
It could be one of the greatest gifts you can ever give them.