S12 Ep2 Family Matters: Children

In the second episode of this ‘Family Matters’ season, Simon and Bex discuss various financial matters that arise in connection with having children.

Some key points of interest covered in this episode include the following:

1. When asked how much money people need to have in order to be able to afford to have children, Simon suggests that couples should fully discuss the matter but should not make it a financial decision. [01:17]
2. On the topic of what do children need to know about money, Simon notes that it is a complex area and that it is hard to prepare children for what their ‘real world’ use of money is going to be like. Approaches that are likely to be helpful include talking openly about money and the reasons for the financial decisions that we make, including in connection with our giving. [03:32] Modelling certain behaviour – eg giving to the church – can also have a significant impact, as Bex observes. [05:39]
3. Simon comments that it is becoming more complex and challenging for young people to become financially knowledgeable, adept and independent, with the result that practical and emotional support from parents has become more important than ever. [06:27]
4. Some tips and tricks from Simon for educating children financially include getting them to save for items or to pay instalments to parents for special purchases, as well as briefing them on payment options such as interest free loans, buy now pay later, and credit cards. [08:18]
5. As far as specific accounts for children are concerned, the disadvantage of Junior ISAs is that they can give an 18-year-old unfettered access to a significant amount of money, which may not always be helpful or wise. Parents can, however, use their own ISAs to build up savings for a child in a more controlled manner. Current accounts for children can get them used to managing their own money while prepayment cards, in particular, can provide them with useful hands-on experience of making their own purchases. [09:41]
6. Simon talks through the pros and cons of taking on debt through loans, with a particular focus on student loans. [11:47]
7. Simon explains some of the factors that need to be taken into account when parents are considering assisting children financially with the purchase of a property. [14:58]
8. Other factors worth considering when parents are thinking about giving money to their children include tax efficiency, fairness/equality and clear communication with all relevant parties. [17:40]
9. Simon offers some thoughts for parents on the tricky issue of how to deal financially with a child who is making contrary lifestyle choices. [20:03]
10. When asked what end of life, financial preparations parents can make that will be helpful to their children, Simon emphasises the benefits of simplification and good communication. [22:08]
11. Bex draws attention to Season 4 of the podcast as a useful resource for anyone looking for tips and practical suggestions about having conversations about money. [24:25]
12. The focus of next week’s episode will be on financial issues that have particular relevance for parents. [24:55]

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