How to get a 15 year old to manage their finances

Alarmingly, the “Bank of Mum and Dad” is now a top ten lender, according to a recent report, creating a generation who aren’t familiar with managing their money. Can accountants help course-correct?

What should today’s young people be thinking about? Where are the knowledge gaps, and is there a role for accountants to play?

Planning for young people

Let’s say our target audience is 15, how would you advise them at this early stage?

“Start monitoring your spending,” says Alexandra Bond Burnett, Director of finance communication company Bond Ambition, “and get into the habit of doing cash flow forecasting.”

This doesn’t sound like an awesome Friday night, she acknowledges, “so the key is to change the terminology. Call it future planning, for example.” Communicating with teenagers means putting things into language and concepts that will resonate with them.

“Look at what your goals are, and what you want to achieve. Do you want to go to university? Buy a car? Go travelling? Start a business? These are all expensive things. How will you get there? What do you need to do to make it happen?”

As soon as you start communicating in this way, Bond Burnett says, young people will get engaged. “You need to make goals tangible because even a year seems such a long way away.”

The main objective is to help young people start to think strategically.

Encourage aspirational dreams, and approach them pragmatically. “Have those dreams, absolutely – and then think, if I want to do X, I need to do Y.”

Key tip

• Ask the right questions. Use terminology that appeals to young people.

What kind of plan?

It can be large or small. “When I was 16,” she says, “what I was most interested in was music. So I got a job in Our Price, because I got a discount on cassettes.”

Those of us who are no longer 15 may well remember Our Price – and cassettes. “Then, when I was 18 I got a job in a mobile phone shop to get a discounted phone, and of course when I was at college, the most sensible part-time job was in a bar.”

This, Bond Burnett says, is financial planning – taking on the job that’s going to get you a head start in what you most want from life – but thinking like this needs a nudge.

For Bond Burnett, “the thing that’s perhaps the most different now from when I grew up is your financial footprint. Young people might not think about it now, but one day they’ll want to buy a house or a car; you never know how your credit rating might impact things.”

An informed awareness is sufficient. “Be on the electoral register; and don’t move around too much if you can help it.”

Key tip

• Know your credit rating profile. “It’s not something we’re ever told about, but it’s essential.”

A role for accountants

Sam Tasker-Grindley, Associate Director, Accounting and Business Advisory at RSM UK, believes there’s a strong argument for accountants getting involved.

“Perhaps in the past, accountants might say – that’s not my job. But I would say we do have a role, if not a responsibility.” It would make sense for accountants to do this gratis, he says – build relationships with young people, and show along the way how accountancy might be a career they might be interested in.

“It’s a win-win because it’s a way of giving something back to the community, whilst acknowledging that the profession has a massive talent gap. In a candidate-driven market, it would be great to find ways of finding and nurturing future accountants.”

Should money be taught in schools? “Absolutely. You don’t need an exam on it – but there should be a compulsory module, perhaps just an hour a week, to give you what you need to know on personal finances.”

Key tip

• Learning about money should be taught in schools; and accountants could go in to share knowledge. “I was taught very little about money as a teenager,” says Tasker-Grindley.

Tap into their love of tech

How best to make the advice resonate with our slightly reluctant 15-year-old? “Talk about tech,” says Tasker-Grindley. “That is absolutely the way to reach young people. There are lots of apps out there that will help you, that didn’t exist when I was at school.”

It can range from small amounts of pocket money, towards (if you’re fortunate enough) trust funds.

“Monzo and Starling and the challenger banks offer these kinds of apps. Yolt is a specific expense tracking one. Or look at Moneybox. If you buy a drink for 85p, it rounds your expenditure up to £1 and saves the 15p.” So not only is it easier to start investing, it eases you into thinking along those lines.

“If I’d had that at 15, a few pounds a week would have really built up by now,” Tasker-Grindley says, with just a trace of wistfulness. “You can set aside particular pots of money, for particular things you want to buy.”

Key tip

• Apps can help you look after your future. “You can see instant rewards, and it’s far more exciting than going to a hole in the wall to see what your balance looks like.”

Getting creative with the property ladder

When it comes to buying homes, inevitably today’s children will have to be creative.

“It’s problematic, but the key is to think – at some point in your life you will need a large chunk of money, and even if you get some help, you can’t rely on it coming from family,” says Bond Burnett.

“If you can get to the point where you can put a deposit down, try to make it pay for you – can you rent it out until you can move in, or rent part of it out when you’re there?”

Thinking long-term might enable creativity. “Say you’re commuting into London, but you can buy a cheaper property in a different part of the country. You might not want to live there yet, but could you see yourself doing that long-term?”

Key tip

• Be creative about how you see your finances long-term.

In summary

• Encourage young people to get a head start. “[They need to] have a budget, and learn how to make their finances work for them,” says Alexandra Bond Burnett.  
• Think about the terminology you use. Don’t call it financial management – instead ask, what do you most want, and how are you going to get there?
• Be creative, and use the tech. Software to run finances is a way of making money management more appealing. 
• There’s a role for accountants. “But if you do go into schools, it has to be the right person,” says Sam Tasker-Grindley. “Someone who can connect with young people, not a – shall we say – traditional grey-pinstriped figure at the latter end of their career!”

Further reading on the next generation and managing your finances;

• Is new technology to blame for poor literacy in maths?
• Generation Z: changing the accountancy world
• Needs an accountant: How Nicolas Cage blew his millions

Mark Blayney Stuart is Business Journalist of the Year, Wales Media Awards 2017 and Former Head of Research at the Chartered Institute of Marketing.