People who save vs people who spend, what are the causes of the differences between the two types of people?
According to experts, the age when you start to learn how to spend responsibly has a massive impact on which type a person will be. The government's Money Advice Service and Cambridge University recently conducted a study and found that a person's habits in relation to money are set by the time they reach the age of seven.
The report indicates that by that age, children understand the value of money, planning ahead, delaying decisions when necessary and understanding which choices can't be reversed.
Dr David Whitebread, a co-author of the study says:
“The habits of mind which influence the ways children approach complex problems and decisions, including financial ones, are largely determined in the first few years of life,”
The model provided by parents as part of their day to day behaviour is also a large factor:
Since young children have few monetary resources they control independently, it is the basic approaches and skills which are modelled, discussed and demonstrated by parents that are likely to be influential levers, instilling efficient habits and practices,”
A survey by M&G investments found that 83% of parents are aware of the value of teaching their children about the value of money. This is tempered by the fact however, that one in six do not feel that they have the necessary knowledge to follow through with this education.
Giving children pocket money is one way of exposing them to managing their finances on a small scale, and using an educational game is another.
Two thirds of Millenials wish that they had received advice about money at an earlier age according to a survey conducted by Santander.
The advice that children receive about how to manage money at an early age forms their later behaviour to a huge degree.
Contact Westminster Wealth Management today and one of our skilled advisers can construct a financial plan for you that will enable you to meet your financial goals.
Game on: it’s never too early to teach children about money