As parents, we spend years preparing our children for life. We teach them to tie their shoelaces, cross the road safely, say please and thank you, and work hard at school. We encourage them to read, solve problems and dream big because we know education opens doors. Yet there is one subject that will influence almost every decision they make as adults that many of us barely talk about.
If your child finished school tomorrow, would they know what a pension is? Would they understand why people save for retirement, what a mortgage actually means, or why some people invest while others leave all of their money in the bank? For most families, the answer is probably no. That isn’t because schools have failed them. It’s because financial education starts somewhere much closer to home. It starts around the kitchen table.
For many of us, money was one of those subjects that simply wasn’t discussed growing up. We didn’t ask what our parents earned, we didn’t know how mortgages worked, and pensions were something we assumed we’d think about when we were older. Investing sounded like something reserved for wealthy people in suits. Money wasn’t necessarily forbidden, but it often felt like something that was whispered about, avoided or left until “later”. The problem is that later eventually arrives.
One of the biggest things I’ve learned during my years as a financial adviser is that the greatest barrier to good financial planning isn’t intelligence. It’s confidence. I’ve lost count of the number of people who’ve apologised before asking me what they think is a silly question about pensions, mortgages or investing. Nobody has ever apologised for not understanding algebra, but many apologise for not understanding their finances. The truth is that nobody is born knowing these things. Somewhere along the way, someone has to explain them.
Interestingly, the evidence supports that idea. The OECD’s latest PISA Financial Literacy study found that students who regularly discuss spending decisions with their parents perform better in financial literacy than those who never have those conversations. Around 64 per cent of students talk to their parents about spending decisions at least monthly, and those young people achieved higher financial literacy scores than those who rarely or never discussed money at home.
I’m not suggesting children need to know the family income or sit in on conversations about household bills. But I do think we need to stop whispering about money. Children are naturally curious. They notice when you compare prices in the supermarket, when you decide to wait until payday before buying something, or when you explain that you’re saving for a family holiday instead of replacing a perfectly good television. Those everyday conversations are financial education, even if we don’t think of them that way.
Money habits don’t begin with a first job. They begin with the messages children absorb growing up. When a child learns that saving means waiting for something worthwhile, they’re learning patience as much as they’re learning about money. When they understand that earning money takes effort, they begin to appreciate its value. When they see thoughtful decisions instead of impulsive spending, they’re learning that money isn’t about buying everything you want. It’s about making choices that reflect what’s most important to you.
Last month I wrote that every euro should have a job. In many ways, that’s a lesson children can understand too. Some money is for spending, some is for saving, some is for future goals and, eventually, some is for retirement. They don’t need to understand tax relief or investment markets to grasp the simple idea that every euro has a purpose.
The same is true of borrowing. Most children understand that borrowing means getting something today. Fewer understand that it also means giving up some of tomorrow’s income to pay for it. Equally, they don’t need to understand the finer details of compound growth to appreciate why someone who starts saving in their twenties has an enormous advantage over someone who waits until they’re fifty. These are not complicated financial products. They are life lessons that become much easier to understand when they’re introduced gradually over many years instead of all at once in adulthood.
If I could choose just a handful of financial lessons for every child to leave home with, they would be simple ones. Money is earned, not simply received. Saving and investing creates freedom and choices. Debt should be understood before it’s taken on. Time is one of the greatest financial advantages any of us will ever have. Every euro should have a purpose. Most importantly of all, there should never be any embarrassment in asking questions about money. The people who ask questions usually end up making better financial decisions.
We often hope to leave our children a better future. For some families that may include money, property or investments. But confidence is an inheritance too. A child who grows up understanding money, rather than fearing it, carries something valuable long before they ever receive a single cent. Perhaps the greatest financial lesson we can teach our children isn’t how to make money. It’s how to understand it. Because confidence with money isn’t inherited. It’s taught. And for most families, the first classroom isn’t school. It’s the kitchen table.
Halpin Wealth and Mortgages offers free consultations. Visit www.hwm.ie or email [email protected] to learn more.