Talk Money Week from 4 to 8 November is a campaign to start more open conversations about wealth. Events across the UK aim to spark discussions with friends and family members of all ages, covering topics from pocket money and basic budgeting to pensions or estate planning.
The campaign might encourage you to consider your own children or grandchildren, and whether you have discussed important financial topics with them.
Read on to learn three life-changing financial lessons to teach your loved ones during Talk Money Week.
1. Delayed gratification and the habit of saving
Delayed gratification is the ability to resist the temptation of an immediate reward in favour of a larger reward in the future.
The basic practice of regular saving relies on this skill. Instead of spending all your disposable income on luxuries now, you sacrifice some of this instant gratification so you can build wealth for the future.
This simple concept is at the heart of financial planning because, once you’re able to delay gratification, you can manage your spending and begin working towards long-term goals. That’s why you may want to teach your loved ones these skills as early as possible.
For young children, pocket money is an excellent way to do this. For example, if there is an expensive toy they would like, explain how they can save a small amount of their pocket money each week until they can afford it. You might even match their contributions to give them an incentive.
You may also want to consider opening a Junior ISA (JISA) on their behalf. In 2024/25, you can contribute up to £9,000 to a JISA. You’re able to pay into a Cash JISA, invest in a Stocks and Shares JISA, or use a combination of the two.
Similar to an adult ISA, your child won’t pay Income Tax, Capital Gains Tax (CGT), or Dividend Tax on any interest or investment returns they generate.
A JISA is an excellent way to build wealth to help your child pay for university, their first car, or even a deposit on their first home. By involving them in the process and showing them how their wealth is growing, you can demonstrate the value of saving.
Once they turn 16, they can manage their own JISA and when they’re 18, it will automatically transfer to an adult ISA and they can withdraw the funds.
You can find more information about investing for your children in our in-depth video guide.
2. The importance of paying yourself first
Once your child or grandchild understands why it’s important to save and invest for the future, you may want to teach them how to put this into practice.
As they get older and have their first job, or even move away from home, they’ll have to start budgeting for themselves. One of the most powerful lessons you can teach them at this stage of life is the importance of “paying yourself first”.
This means immediately contributing a regular amount to savings and investments for the future as soon as you get paid. So, you pay yourself first before settling your bills, buying essentials or spending on luxuries.
As it’s factored into the budget, you always have enough to contribute to savings, regardless of what you spend throughout the rest of the month.
This could make it much easier to build wealth than it would be if you waited until the end of the month to save because you’re not tempted to spend that sum.
If you teach your loved ones this crucial budgeting lesson as soon as they start earning and paying their own bills, they can begin building wealth right away.
3. The power of compound interest
Talk Money Week is a good opportunity to discuss financial topics with friends and family members of all ages, including your adult children or grandchildren. Teaching them about compound interest could be a good way to encourage them to invest for the future. This means they may be better able to reach their goals and afford a comfortable retirement.
For example, figures from Nest show that if you made a total £200 monthly contribution – including employer contributions and tax relief – to your pension between age 22 and 32, you would pay in £24,000.
If you achieved 5% growth each year on this £24,000, you would have £125,000 at age 60.
In comparison, if you contributed the same amount between the ages of 32 and 42, and achieved the same 5% growth each year, your pension pot would only be worth £77,000 at age 60.
This is because you started later and didn’t benefit from compound interest for as long, meaning your retirement pot is significantly smaller.
Your adult children may not be thinking about retirement in their 20s and 30s because it seems so far away. Yet, if you teach them about compounding and demonstrate the value of starting early, they may be more likely to save now.
Ultimately, this could mean they can afford a better quality of life in retirement and may be more likely to achieve other financial goals.
If your loved ones need guidance about pensions, investing for the future, or any other aspects of their financial plans, we can support you with those conversations.
Get in touch
If conversations with your family during Talk Money Week raise any important questions about your financial plan, we are here to help.
Email hello@fcadvice.co.uk or call 0333 241 9900.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term (minimum of 5 years) and should fit in with your overall risk profile and financial circumstances.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
