Kids & Money - Five takeaways

In recent months, we’ve published a number of articles and videos about kids and money, beginning with an introductory video over the summer.

Since then, we’ve looked at both how children should learn about money and how you can invest for children. Teaching children about money is especially valuable, since it equips them to overcome the usual behavioural biases as they approach adulthood, and begin to manage their own finances.

But parents, grandparents, relatives and friends can also help prepare children for their financial futures by investing, and even small amounts can ultimately make a big difference.

As we close our series, we’ve chosen five key takeaways that can enable you to help children successfully navigate the financial challenges of adult life.

1. Recognise the challenges. Some of the greatest costs of adulthood have risen rapidly in recent years, not least the costs of further education and of buying a home. As a result, preparing for these costs has become all the more urgent.
2. Teach good habits. Children pick up core money habits between the ages of three and seven, irrespective of whether those habits are well-taught. Enabling a child to learn good habits should equip them for their future.
3. Get the family involved. There is no need for good lessons and habits to be learnt in isolation, but the OECD reports that, among developed countries, Brits are relatively poor at talking about money. Yet talking regularly and making plans together should enable better decisions.
4. Recognise the long-term opportunity. Given the financial challenges of raising kids, many of us assume we could never make a meaningful investment for our children’s futures. However, if you start early, the power of compound interest can transform even small sums.
5. Navigate the complexities. There are other incentives too, but they are not always easy to decipher, unless you have the exp. Understanding the risks and opportunities presented by your local tax regime could make those long-term goals easier to realise.

In short, the challenges are significant but, with time on your side and a careful approach to planning, the opportunity to build now for your child’s financial future is well worth grasping.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.