Did you notice that back in the early days of lockdown, people were bartering goods: neighbours and friends exchanged toilet rolls for flour or swapped hand sanitiser for pasta? In fact, this method of trading goods goes back centuries and is one of the ways in which we introduce the theme of money & savings during our Money Metrics programme in primary schools.
Getting kids talking about money is absolutely vital in helping them become financially astute adults but if talking about money was a taboo subject for their parents as they were growing up, it can be difficult to break the habit of a lifetime.
However, research from the Money & Pensions Service (MaPS) shows that children’s financial habits are formed by the age of seven, which will be a real eye opener for many parents and may just be the impetus needed to start discussions now.
Things to think about when opening a children’s savings account
There are many facets to financial literacy but arguably establishing good savings habits needs to be a priority and with this in mind, we’ve produced a handy list of seven reasons why parents should consider opening a saving account for their children this week.
It’s My Money Week! My Money Week is an initiative run by the charity Young Enterprise which some parents may remember from their own school days. The week has been running for over a decade and is aimed at getting young people aged 4 – 19 excited and interested in financial matters. Many of their resources are used by schools across the country, but as most of the UK’s children are being homeschooled or not working to the normal curriculum, it’s up to parents to step up instead.
It’s never too young to start discussing financial matters with children. The MaPs survey referred to above, also states that kids can grasp money concepts as early as the age of three, and certain financial behaviours, like saving, will likely become second nature by the age of 15 – but only if it’s taught.
Are children familiar with the term ‘savings’? According to The Money Charity there were almost 10 million households with no savings whatsoever during 2017 and the recent pandemic is likely to have pushed this figure even higher. Financially literate children are more likely to save but as adults we need to familiarise them with what this means.
Anyone whose children have had birthdays during lockdown will have experienced the challenge of trying to break the monotony of being at home as well as sourcing presents without the ability to visit shops. Friends and relatives may have just found it easier to send money this year too. With that in mind, it’s the perfect time to instill good savings habits and to encourage children to put some of their birthday funds into a savings account for fun activities in the future.
Many parents link their children’s pocket money with the completion of various chores, such as emptying the dishwasher, vacuum clearing or watering the plants. With more children helping around the house during lockdown, now might be just the right time to talk about implementing a saving/spending ratio. This is where the child is allowed to spend a certain proportion of their pocket money but also needs to put some away for a rainy day. It can be really helpful for children to understand that their parents are budgeting in this way too.
In most cases, parents will need to take their children to a branch to open a children’s savings account in order to complete the relevant paperwork and submit identification. As this tends to require an appointment, it is fairly straightforward for both parties to maintain social distancing. Even in normal circumstances, children are usually excited about the concept of having a savings account as it is a step towards being ‘grown up’. However, with limitations in possible activities due to COVID-19, a chance to go out and set up an account could also be an entire afternoon filled. Win-win!
Only a third of parents talk to their children about money but of those who do, 77% say they find their parents’ financial advice most helpful. Parents don’t need to have an in-depth knowledge about how an APR is calculated, but they just need to start their children off in the right direction by making money and savings a normalised topic of conversation.
There you have it. Seven reasons to open a children’s savings account during My Money Week.
With lockdown putting a hold on many of our busy lifestyles, why not use the time to start encouraging good savings habits amongst your children?
For additional resources, please see our other blog post on some great resources to help you discuss money with your kids.