My Financial Life – Starting in the tweens and teens

This is the last in a series of articles looking at the different financial pressures and opportunities open to women and girls at every decade of their lives.

I hadn’t intended to write one focussing on the teen and tween-age years, as I figured many of the decisions made in this decade are actually made by parents. However, my two daughters are 16 and 18 years old and are now beginning to realise the value of money, what it takes to earn it and how quickly it vanishes from their bank accounts.

The big shift came just before they turned 16 and the little brown envelope arrived detailing their National Insurance number.

Not long after, they both got part time jobs in a local pub and when their first pay packets dropped into their bank accounts, it was a total game changer.

They had “real money” for the first time, and it quickly became apparent what sort of relationship each was going to have with their finances.

One, the eldest, seems unable to resist spending her wage almost as soon as she gets it, and we are now on a first-name basis with the man who delivers all those online shopping parcels.

The other hoards her cash, lording her balance over her sister whilst shamelessly “borrowing” items of clothing that aren’t hers.

As a parent, it’s given me the opportunity to offer them financial tips and tricks to help them travel the first few miles of their money journey. I started early. In fact they would clutch a shiny pound coin as I wheeled them around the supermarket when they were still small enough to fit in the trolly seats, carefully working out what to spend their money on.

But once they entered those precocious tweenage years, a banana or a chocolate frog wasn’t going to cut it. Each month I put £5 into their bank accounts, and they got a kick out of using a debit card to pay for the things they wanted.

They learned early on the importance of keeping an eye on their balances and how saving up a couple of months' pocket money (plus any birthday money they got from friends and family) could result in being able to buy things they really wanted.

Now they have online bank accounts so they can keep an eye on their spending easily, and they’ve both started digital savings accounts with a monthly £25 direct debit which goes out the day their wages go in.

At the moment, they haven’t had to pay tax or National Insurance, but they’re hyper aware of what it is because many of their colleagues pay it. And they’re waiting expectantly for the increase in the National Living Wage, although the 16-year-old is miffed that her wage is and will remain substantially lower than her 18-year-old sister, though they do exactly the same job.

I’ve found conversations about money are much easier when they have real life implications.

Explaining the superpower that is compound interest was just exciting enough to persuade my daughter that the small amount in her Child Trust Fund shouldn’t be spent on a mega shopping trip but instead to open a Lifetime ISA that should help her with the deposit on her first house (and hopefully mean she won’t still be living with us when we hit retirement).

If your child was born between 1 September 2002 and 2 January 2011, they will have had cash put into a tax-free account — £250 during their first year and a further £250 at age 7 (though that second payment was scrapped in 2010).

Even if you’d forgotten all about it, you or your teen can track it down via the Government’s Gateway service as long as you have their National Insurance number to hand. It’s also the perfect moment to try and promote good investing habits which will stand them in good stead for the rest of their lives.

Some parents get really nervous when their kids ask them about finances but just simple tips on budgeting and saving can help them avoid some of the big potholes out there especially when they start to live away from home.

Jotting down what they’ve got coming in every month, or every term if they’re at university, then working out how much they have to spend every day on food, travel and necessities, and giving themselves a savings cushion for unexpected expenses or fun treats like travelling with friends.

Remember, they’ve probably already come across options to buy now and pay later, so explaining how credit works is a big one. Just knowing that credit normally comes at a price, that once you add interest on, you’ll end up paying a lot more than you would have if you’d saved up to buy it, is a simple lesson but a really important one.

And make sure they’re making the most of all those handy apps out there which make it easy to keep track of spending and help them set a budget and stick to it.

My Financial Life — teens and tweens checklist

1. Start good habits early.
2. Learn how to set and keep to a budget.
3. Track down lost Child Trust Funds.
4. Use tech to help you save for the future — budgeting apps or investing apps like Dodl are designed for ease of use.
5. Don’t be afraid to talk about money with your parents/children.