investing for children

According to a March 2022 Money and Pensions Service report 52% of 7-17 year-olds (5.3m) don’t receive financial education at home or in school and fewer than 30% of 14-17 year-olds plan ahead for how they’ll buy things they need – by Laurence Taylor

The picture is obviously a lot worse where parents don’t feel like they have the skills or confidence to talk to their children about money and encourage good habits from an early age. If you’re one of the 9m adults who have no savings, or the third of the population who are very anxious about how much they owe, then is that a cosy chat you’d like to have with your kid anytime soon?

The impact of all of that is felt most keenly when young people enter the workforce: here we see time and again self-employed workers not setting aside their tax, people opting out of pensions, taking on high-interest credit, and so on.

Perfectly understandable when you’re faced with making tough choices between your needs (rent/utilities/groceries) and wants (goodies/holidays/cars).

‘Parents don’t feel like they have the skills or confidence to talk to their children about money and encourage good habits from an early age’

Looking back through the fog of many years in between, I can remember how longer-term goals such as buying a house or retiring or ever repaying a student loan seemed so very far off when I was a slender young thing deciding whether to buy a Paul Smith shirt or a Nokia 3310.

In addition, what’s happened in the last few years has very likely traumatised any young person dipping their toe over Lockdown into investing in very choppy market waters. Equiniti’s recent informative report (Shareholder Voice 2022) about trends over the last few years quoted investment educator Brian Feroldi’s explanation: ‘… the rise of crypto investing, Reddit campaigns, meme investing, and tools like Robinhood … made it incredibly easy to get exposure to the stock market. Unfortunately, as volatility, inflation and the Ukraine war hit, however you invested, you lost.’ Add in exposure to (ahem!) ‘advisors’ on FinTok and you have a ball of confusion.

So, what can be done to improve things? What new or different elements might we need to introduce or build around in order to help these ‘Digital Natives/Gen Zers’ engage with their financial presents and futures?

The knee-jerk reaction ever since the dawn of e-learning has been: if we make it like a computer game then kids will love it (and many an edutech investor will choke back tears of regret as they read those words).

However, some elements of games that are currently engraving themselves on to the inside of our childrens’ retinas and informing their every utterance (step forward, Roblox and Fortnite) could be seen to lend themselves to bringing finances to life.

‘Green pounds or eco rewards to save/invest that could be proven to replant forests or reduce carbon emissions’

In these arenas kids earn rewards to use, build worlds, and of course fight zombies – the first two of which can easily be reversioned to provide incentives and goal-setting, as well as opportunities for using in immersive environments once we’ve reclaimed the metaverse back from young Master Zuckerberg. What’s needed is something that builds back from the hypothetical/fantasy to the real/tangible, converting Robux into your Junior ISA let’s say…

Maybe the solution is to be found by linking concepts to the biggest challenge any of us has ever faced, namely climate change (however tempting it is to deny something as mind-blowingly appalling or see it as happening sometime never in the future)?

So many young people are tuning into the climate change movement, motivated by the remarkable work of people like Greta Thunberg. If there was such a thing as green pounds or eco rewards to save/invest that could be proven to replant forests or reduce carbon emissions then that might help to get people fully on board.

At the very least we need to give proper advocacy to young people in this space, involve them properly in the development of solutions that they will actually use (rather than being told by banks/software providers: it’s how it’s always been done, you need to adapt to what we in our ancient wisdom provide), and make it affordable so they don’t need to choose between subscribing to it and that those new Sony headphones (with the built-in hearing aids).

Whatever we do, we have to surely couch it in language more engaging than that proffered by the good people at Money and Pensions Service in their recent schools initiative: ‘This week we’re working to turn talking about money from one of the UK’s least favourite topics into something that becomes as natural and familiar as talking about the weather.’ Whoa, guys, steady, you’re so home with the downies…

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