Morningstar Minute: What Should I Teach Kids About Money?

Sunniva Kolostyak opens a new series of short videos on personal finance, examining everything from saving rates to generational wisdom

Sunniva Kolostyak 3 August, 2022 | 10:40AM
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Welcome to Morningstar’s new video series, where we look at some common personal finance questions. Today we’re asking how do you give financial advice to kids?

Talking about money can be hard, especially when talking to children. Therefore, it’s important to make sure kids leave home with the proper tools to achieve financial wellbeing. So, Morningstar’s experts have devised five tips and techniques that you can use.

Number one. Start as soon as possible. It’s important to lay a foundation early, and a great way to begin is to focus on basic concepts like saving over time.

Number two. Simplify, repeat, simplify. Repeating concepts again and again helps reinforce the message.

Number three. Workshops are better than lectures. People learn the most about financial transactions when they need it, not when they’re just being told the theory of it, so if you’re buying a house or saving for a holiday, involve your kids!

Number four. Pros versus cons. It’s important to discuss spending choices and explain that just because you can afford something, doesn’t mean you necessarily have to buy it. Patience usually pays!

Finally, number five. Create savings buckets and goals. A favourite at Morningstar is the bucket-approach to retirement, and this might work well for children too. You can teach your kids to have one bucket for short term savings, another for medium-term goals, and a third for long-term investments.

But the bottom line here is to create a safe place for children to learn about money, with room to fail. After all, there’s no teacher like experience.

This has been the personal finance minute. For Morningstar, I’m Sunniva Kolostyak.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Sunniva Kolostyak  is data journalist for Morningstar.co.uk