As parents, you’ve probably raised a few eyebrows at some of your children’s spending habits over the years. Although many millennials (the generation born between the early 1980s and 2000) are actively saving, according to a recent Bankrate survey, one in five millennials still aren’t putting any money aside. But, as parents, can you really make a difference?
A study by Experian revealed that millennials who enjoy a positive parental influence around money have twice the level of savings and half the amount of debt compared to those with a negative parental influence. If you’re not convinced your children are as financially savvy as they should be, it might be time to step in and challenge them with a few new savings resolutions for 2017.
Resolution 1: Make better choices
When it comes to saving, reining in excessive spending can often be the hardest part. A study by Eventbrite revealed that, when it comes to finances, 3 in 4 millennials would choose to spend their money on an experience or an event rather than buying something tangible, and that 69% of this age group’s spending habits are driven by the fear of missing out (FOMO).
With social media giving us an insight into the lives of our friends and celebrities like never before, it’s not surprising that our modern-day spending habits are becoming more aspirational. However, if your children are struggling to save money each month, you might want to try and help them identify the motives behind their spending habits. Are they being frivolous on nights out or going on holidays they can’t really afford in order to keep up with their friendship group? If so, it’s likely they’ll be able to find areas where they can cut back by just making a few compromises.
Resolution 2: Take on more responsibility
If your child often takes a back seat when it comes to managing their finances, why not encourage them to be more proactive about managing their money in 2017? A study by Experian indicated that some millennials aren’t actively keeping track of their finances, with 21% having previously gone into an unplanned overdraft – a habit that can end up being rather costly.
Before we head into the new year, going over a few financial basics could help get your children back on track. From helping them come up with a monthly budget plan and setting realistic savings goals to downloading money management apps, helping your children build an awareness of their own finances is key to breaking a few bad spending habits.
Resolution 3: Plan for the future
As well as helping your children gain a better awareness of their spending habits, encouraging them to think beyond saving for their next holiday is a great mentality to start the new year with. Last year, a report from Goldman Sachs showed that 93% of 18-34 year olds want to own their own home in the future, so helping your children actively save for a mortgage deposit, for instance by encouraging them to open a Help to Buy ISA, and not just for short term goals will help them reach the milestones they value in life.
Although it may seem a long way off, preparing for retirement as early as possible is the best way to ensure your children are looked after in the future. From consolidating any existing pension schemes to setting up an account if they haven’t done so already, preparing your children to be financially secure in their old age will give you peace of mind that they’ll be provided for when you’re no longer there to support them yourself.
With the new year almost upon us, there’s no better time to help your children take a fresh approach to their finances. Although we all know breaking bad habits is easier said than done, with a little extra guidance, hopefully you’ll be raising a few less eyebrows at your children’s spending choices in 2017.
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