5 min read

How to pass financial advice through the family

When it comes to financial advice, it can be difficult to know where to turn. Many people don’t want to pay to speak to an adviser or don’t feel comfortable discussing their finances with a stranger.

father and daughter counting money

It’s not surprising, then, that when it comes to talking about money, many of us are choosing to keep it in the family.

A survey by National Savings & Investments reveals that almost a third of people prefer to go to their parents for advice on money matters. More of us are likely to turn to our parents for advice than to a partner or even a financial adviser.

The financial advice bank of mum and dad

It’s well documented that the Bank of Mum and Dad has become a common lifeline for young people trying to get a first foot on the property ladder or struggling to pay off student loans. And, clearly, we place great stock in our parent’s decisions. Around 40 per cent of people still use the same bank their parents chose for them when they were young.

Talking to children about savings and finances at a young age has obvious benefits. It gets them thinking about the value and importance of money, where it comes from and how it is used. Yet research from the Money Advice Service reveals only one in three parents talk to their children about household finances. That’s despite the fact that 70 per cent of parents believe they are a good financial role model.

Its research found talking to children about money could be as important as setting up a Junior Isa to save for their future. Jill Waters, retail director at NS&I, says:

“It’s healthy to talk about your finances, whether that be informally with friends and family, sharing experiences, or speaking to an independent third party such as a financial adviser.”

Start the conversation

A great first step to help get children interested in money is to start a savings account for them. Not only will this help them to build a nest egg for the future but they will likely become more engaged as they see the value of their pot grow.

Parents and grandparents could offer to match the amount a child saves as an incentive for children to put money aside. Or they could put money into the account as a reward for chores rather than giving them cash.

If your kids have a stocks and shares Child Trust Fund or Junior ISA they could start tracking the performance of their funds.

At home, showing children household bills and getting them involved in finding the best value items on the weekly food shop can all help to get young people thinking about money.

Get online

But it’s not just children who rely on their family for financial advice. The shift to online banking and digital transactions mean many parents and grandparents are also relying on younger relatives for financial help.

Some 26 per cent of under 35s have provided advice to their parents, while one in ten people aged 55 and over admit to asking their children for financial advice.

Lucy Bott, head of customer operations at RateSetter, says:

“We often hear that many young adults enjoy the generosity of the Bank of Mum and Dad but, interestingly, significant numbers of parents also look to their growp-up children for money advice, perhaps reflecting the rapid growth of online financial services.”

For younger people, much of the help they can provide will relate to helping older relatives navigate the online financial world. Setting up online banking and shopping accounts and installing safeguards such as anti-virus software onto computers or tablets are great first steps.

Comparison websites might be overwhelming for those who haven’t used them before but can help to save hundreds of pounds on household bills and insurances. Tech-savvy savers can show older relatives how to switch their bank or savings account to earn more interest or change their insurance or phone provider to get a better deal.

Lucy Bott adds:

“It can be difficult to know where to turn with major financial decisions and, with trust being such an important part of financial advice, it’s only natural that people turn first to close family members.”

Written by Holly Black – Financial Journalist

 

Note: Whilst we take care to ensure Talking Finance content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decision. The opinions expressed within this blog are those of the author and not necessarily of OneFamily.