It’s never too early

July 19, 2016

Money management skills should be taught from childhood, says Helen Johnson, portfolio manager at Sanlam Private Wealth

Being successful in business is as much about closely managing your finances as it is about coming up with the right product or service. For some it comes naturally, but for others it can prove to be the hardest part of running a company.

In a way, that’s not particularly surprising. As children, we didn’t have ‘managing your money’ alongside maths and English on the curriculum. Most of us found ourselves out in the big, wide world with no real clue (or interest) in saving or building a nest egg.

Here are some ways in which we can instil good financial behaviours in our children, whatever their age. And perhaps remind ourselves of some good financial practices while we’re at it.

The value of saving

The sooner you start to teach your children how to save, the better. Rather than succumbing to the temptation of buying them the latest bike or console, encourage them to save up for it. Setting financial goals at a young age can help instil a sense of achievement and financial purpose.

Learn the value of working for your money

Whether it’s employed or entrepreneurial, participating in some kind of work teaches us all many lessons and skills. Not least, it teaches us about the value of money and the effort required to earn it, and helps us appreciate the things that are sacrificed to go to work in the first place.

The seriousness of credit

The sooner your children understand the impact of credit, the better. Many people think credit is ‘free money’, using up their overdraft or taking out a loan or a credit card. As a result, young people can find themselves unable to get on the property ladder because they are already over-committed to debt. The lesson is to live within your means, and only use credit once you fully understand how it might affect your finances and lifestyle.

Understanding financial products

ISAs, loans, insurance – these are all terms children will come across later in life. Anything you don’t fully understand can seem daunting at first, but teaching children about basic financial products will help them see how simple they are. For example, an ISA (Individual Savings Account) is simply an account that allows you to earn interest on cash or shares free of tax, and a loan is just an amount of money that you borrow, often from a bank, which must eventually be paid back with interest.

Insurance is also important. Most people accept the necessity of car and home insurance, but they’re reluctant when it comes to life insurance. However, the principle is the same: the insurance is there to protect your family in case something happens to you.

The difference between cash and investments

If you keep your money in a bank it will be safe, but it will barely grow. On the other hand, if you invest it – for example in the stock market – you have the potential to earn much more, but also risk losing it. It’s important to know the difference, and to be able to sensibly embrace both for longer-term financial planning.

Retirement planning

It seems counter-intuitive to talk to youngsters about retirement, as it may seem a long way off. But the sooner you start planning for it, the easier it is to achieve. Most people think retirement planning is all about pensions, which have had a lot of bad press. But, that’s not a good enough reason to ignore them, especially when you consider the tax advantages. Besides, there are many ways to plan for the future – investing in a property ranks highly among them.

You may not consider yourself a financial guru, but these few simple steps can really help you, and your family, prepare for the future.


Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.

Sanlam Private Wealth is a trading name of Sanlam Private Investments (UK) Ltd which is authorised and regulated by the Financial Conduct Authority. Sanlam Wealth Planning UK Limited is authorised and regulated by the Financial Conduct Authority.

0191 300 9242

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