By Annabelle Williams
In an increasingly cash-free world, how can you teach your children about money? Martin Gronemann, talked to The Times about ReD's research on financial literacy and kids.
In the article, he notes that it’s easier for children to get money out of their parents these days. And that digital money, like in-app purchases, smartphones paid for by direct debit out of a parent’s account and credit cards saved on to online shopping accounts make it hard for youngsters to learn the value of money.
It's clear that there is a difference between financial concepts, which young people can understand readily, and applying those lessons, which is harder to do. Gronemann gives this example to The Times: A young adult will know what a budget is, but will be unsure how to draw one up. They may understand what an interest rate on a savings account is, but be uncertain about opening an account. To tackle this, parents need to have more frequent conversations about money with their children and help them practically.
“Many parents don’t do this because they aren’t in agreement with each other. When your child gets a smartphone, when they get their first debit card, these are good moments to talk about how money works and give tips on how to manage money.”
Take them to open a savings account, show them the interest on their Junior Isa’s annual statement. If you have investments in their name, explain what it’s all about. Mr Gronemann elaborates:
“Children find ways of gaming their parents. For example, they know they can ask to go to the cinema and say five of their friends are going. No parent wants to be the one to say, ‘No’.”
Not having clear boundaries undermines the message that money is finite. Practice what you preach because children can grow up to mirror the behaviour of their parents.
Read the article in full in the physical paper of July 21st 2018 or online here.