Money is an integral part of our daily lives and a key factor in our well-being, but money management is not a topic we are not educated on or given textbooks on how to navigate. Many families are now thinking about the pressures of the cost of living, but people still find it difficult to start the conversation about money; in 2020 we found that 40% of people keep money secret from loved ones. As a nation, we really don’t talk enough about money.
The scale of the problem
Financial well-being is a sense of security and control. It’s knowing you can pay your bills today, handle the unexpected, and be on your way to a healthy financial future. But one in two adults (45%) in the UK do not feel confident in their day-to-day money management and
11.5 million have less than £100 in savings (The 2021 Financial Wellbeing Survey).
These financial challenges are evident among young adults, who have the lowest levels of financial confidence compared to other age groups. 58% do not feel confident in managing their money; and this increases to 67% when it comes to not feeling confident about planning for their financial future. Too many young people enter adulthood without the necessary financial life skills.
Two million more children will receive meaningful financial education
Developing good financial capabilities requires financial education at home, in the community, and at school. However, only 48% of children aged 7 to 17 in the UK receive significant financial education at home or at school. This means that 5.3 million children and young people are missing out on vital learning. Here, a measure of “meaningful” financial education is that the child/young person remembers about money at school and/or receives key elements of financial education at home. This is a national measure linked to the UK Strategy’s national target for 2 million more children to gain meaningful financial literacy by 2030.
The role of parents and the home
Our data shows that the skills, knowledge, attitudes and behaviors that help people manage money and achieve good financial well-being begin to develop from an early age, between the ages of three and seven (Money consulting service; Whitebread and Bingham, 2013).
The home is an important place for children’s financial development, but the role of parents and caregivers is often unrecognized. Parents and caregivers have a big influence on children’s money skills, knowledge and habits because they create an environment in which children regularly observe, talk about and experience how money is used. Children are more likely to have stronger money skills when their parents talk about money, model financially competent behavior, and hold children accountable for saving and spending decisions. What’s more, talking to kids about money not only helps kids develop healthy financial habits for life, but can also help parents improve their financial well-being.
Strengthening the confidence of parents
Despite the important role parents play, fewer than 3 in 5 (58%) feel confident talking to their children about money (Analysis of the 2019 UJ Children and Young People’s Financial Empowerment Survey). The problem for many is that they don’t realize they need to start early and don’t know what to do or when to start those conversations, especially if they’re not confident or in control of their own finances. They often have to deal with conflicting priorities, are short on time and, in many cases, shy away from the topic due to fear or guilt. This is exacerbated by the lack of existing provisions aimed at supporting parents to help their children learn about money.
Our evidence-based financial program for parents, Conversation Learn to dodemonstrated that building supports into parenting services to help parents talk to their children about money can be effective in improving child and parent financial empowerment outcomes.
There is a body of evidence and interventions developed by the Money and Pensions Service (MaPS) and stakeholders in the financial services, education, voluntary and community sectors that tell us what works and provide tools to support parents in this role. Action is clearly needed to support parents to improve the financial wellbeing of children and young people across the UK, building money skills and confidence that will last a lifetime.
Policymakers who define parenting support, as well as funders and commissioners of parenting programs should include financial empowerment as a primary outcome of their interventions. This should include helping parents talk to and teach their children about money, as well as providing opportunities for families to learn together to strengthen their money skills. This may include embedding financial capacity programs such as Conversation Learn to do as a module in existing provision and supporting practitioners to develop the skills to deliver it.
Organizations working with families should emphasize the role of parents in supporting children to develop strong money skills for the future and direct them to tips and tools that can help, including How to teach children about money | MoneyHelper.
Where appropriate, all financial education programs for children and youth should include activities that support parents and carers to participate and contribute to children’s learning.
Posted by Sarah Parretto, Director of Money and Pensions
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