Preparing the next generation

It’s never too late to sort out your finances, but the best gift parents can give children is to prepare them well so they can manage their money successfully when they become independent. 

With the challenges of student debt, living alone and handling bills, young people have a lot to contend with when they leave home. Teaching children about spending, saving and debt with pocket money and allowances early on means they can make small mistakes and learn when the consequences are small rather than struggle when they are adults. 

Intrum’s research shows that parents across Europe are indeed using the experiences of the past few years to focus on these skills. Almost two thirds (63%) say they are more likely now to spend time helping their children understand financial terms and the principles of financial management than they were before the economic crisis hit. 

The latest Intrum European Consumer Payment Report, which surveys more than 24,000 people across 24 countries every year, also says parents are putting money aside as a safety net for their children – 58% say they are doing so. 

The economic difficulties of the past years, from covid to the cost of living crisis, have presented a huge challenge to households. Our research shows that parents are more likely to have struggled financially than others, and it is a testament to them that many are using their increased knowledge to prepare their children for the future.

Understandably, it is common to take a cautious approach. Half (50%) of the parents surveyed say they are counselling their children to look for high-paying jobs rather than following their dreams in low-paying occupations. When it comes to credit, 65% say they are warning their children not to take on any debt, likely in light of the recent sharp rise in borrowing costs, following long period of time with ultra-low interest rates.

As long as it’s balanced, this advice can be helpful. No one wants to be saddled with problem debt. However, it’s important to remember that sensibly-managed credit can be beneficial, as it enables us to buy homes and fulfil our dreams. Children should be taught to manage their money well so they can thrive and achieve their goals, not to be scared of it. Understanding the risks of investing or taking on debt, and learning tools how to manage and hedge against these risks is key.

For more information on how to prepare your children to manage their money, read our insights & five top tips today.

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