Why do many of us have such a bad relationship with money? A recent UBS white paper¹ revealed some disturbing statistics – 56% of married women leave financial decisions to their spouse and 85% of those women do so as they feel the man ‘knows more’. The scariest statistic when taking this into account is that 8 out of 10 women will at some point in their lives be left managing their money themselves. Having had a family friend recently pass away; his widow knows all too well the difficulty taking a back step with money management has caused.
Our relationship with money starts early in our lives. Now, in the digital age of money, how do we best equip our kids to grasp the value of money?
The Financial Planning Association have released their report Share the Dream – Research into raising the Invisible Money Generation² which shows up to 68% of people are reluctant to talk to their children about money, often as they are stressed about their own situation or are concerned the discussion will make their children worry about money. Is this then perpetuating the education gap?
Interestingly, parents with a Financial Planner are much more likely to discuss money with their children. It also starts with simple conversations. Parents who report talking to their children start with pragmatic topics such as how to spend and how to save, how do we earn money, the household budget and how much people earn when they work. More complicated topics such as in app purchases, crypto currency or Afterpay type credit purchases are less likely to be discussed, though this doesn’t make them less important.
Now in the Invisible-Money generation, how do we start teaching children about money when the majority of transactions are tap and go / online based? Pocket money is a great first step for children to practice with money. I know with my 4-year-old daughter, it is about learning simple addition and subtraction, what the numbers, colours and size of the notes and coins represent and the difference of how many ice-creams she will need to forgo to buy a teddy bear. There is a tipping point between the ages of 14-18 where buying shifts from tangible products to online purchases such as apps, games and experiences, so prior education is paramount here.
The research is clear, in order for us to prepare our kids and give them the best chance to have a great relationship with money, we need to talk to them about it early and frequently.
Lee Nickelson is a Certified Financial Planner at Income Solutions in in Richmond, Melbourne. She is passionate about creating a world where her two daughters can grow up to receive every opportunity in life. This article was originally published with references here