How to talk to teens about money – as many think they’ll have a ‘worse life than their parents’

Let them air their worries and help them build financial confidence.

Money has become a significant source of anxiety for young people
Money has become a significant source of anxiety for young people Money has become a significant source of anxiety for young people (Alamy Stock Photo)

Teenagers are worried their generation’s lives will be worse than their parents’, a new survey found.

According to the YouGov poll on behalf of children’s charity Barnardo’s, which quizzed British 1,001 teenagers aged 14 to 17, money, the job market and climate change were among their biggest concerns.

Asked to imagine their lives at 30, more than half (55%) said they believed things would be worse for them compared to previous generation’s lives, with 9% even saying they felt “hopeless” about the future. Some 19% of the teenagers polled said they struggle with money worries.

DD700P Portrait of sad young multiracial woman looking in empty silver wallet (Alamy Stock Photo)

With many households feeling the ongoing strain from the cost-of-living crisis, and lots of families struggling with energy and food bills – as well as rising housing and university costs – it’s perhaps little wonder young people are so worried about finances.

“Money has become a significant source of anxiety for young people in the UK, particularly in the context of the cost-of-living crisis, but not just limited to this,” says Lesley Thomas, founder of The Money Confidence Academy and host of the Let’s Talk Money And More podcast. “This crisis has been heightened due to existing financial pressures, making it even more challenging for young people to contemplate their financial futures.”

So, how can parents and carers talk to teens about finances, and help them build more money-confidence?

Normalise talking about money 

It’s crucial to approach money conversations with teens in an open, non-judgmental manner.

“Start by creating a safe space, where they feel comfortable expressing their concerns and asking questions. Parents could include teens in budget conversations, whilst using real-life examples and relatable scenarios to illustrate financial concepts, making the discussion more engaging and accessible to them,” says chief financial wellness coach and CEO of Roots to Froots, Arlyne Chinyanganya.

Teach them about budgeting 

excited african american teen girl with closed eyes girl holding credit card near smiling mom and laptop (Alamy Stock Photo)

There are many actionable steps you can take to help teens build their money confidence, says Rachel Kerrone, personal finance expert at Starling Bank.

“One way is letting them take over the household budget for a day or week,” Kerrone suggests. “However scary, giving them autonomy over finances is the best way for them to learn and build confidence. You can start small by setting them a specific task to manage money for, like a family meal or weekly shop.”

Encourage a positive mindset

Kerrone adds: “Another practice to instil positivity around money is teaching them to express gratitude. By writing down three things they’re grateful for before bed, they can focus on the positives in their life and put perspective on the negative financial worries.

“Teenagers may also be feeling anxieties over money due to what they’re seeing on social media and the feeds they follow, where they compare their lives to others that may look more lavish. But remember we don’t know the true story behind the feeds. Encourage your children to remove the temptation to compare, and unfollow or block the social media profiles that trigger that,” she adds.

Help instil a saving habit as early as possible

Kerrone says: “Financial problems and worries don’t go away by themselves and shouldn’t be ignored. A way to encourage this is by teaching teenagers budgeting and saving skills. They can start small by putting aside some money each week; £5 can accumulate to £260 by the end of the year. If they have a specific purpose for this saving, this can help them commit to it. This can help teens be more comfortable with money and build up a financially confident mindset.”

2HKY7CT Happy African gen Z teen student couple hugging on couch (Alamy Stock Photo)

Thomas says keeping ELSIPP® in mind – an acronym she coined, which stands for Earn, Learn, Save, Invest, Plan, Protect – is a helpful way to approach this.

She explains: “Earn (money through work, chores, pocket money, or gifted to you ). Learn (learn about money through your own research, asking questions and seeking out trusted advisers). Save (work out a budget and what you can afford to set aside, having decided what your financial goals are, short-term, medium-term and long-term).

“Invest (understand the options available and also your own risk profile, by doing your research and being sensibly curious – if it looks too good, it usually is). Plan (Plan ahead, you may not appreciate it right now, but life moves fast, work out what you want to achieve in the longer term and how you are going to achieve it). And finally protect (look at ways to mitigate the tax you will have to pay on money earned, do your research, plan carefully, speak to trusted advisors).”

Investing may not be suitable for many teenagers at this stage of life, but there’s no harm in supporting their financial literacy and confidence by having these conversations.