What do we teach our children about money

There was a report in the news last week you might have heard about that made for uncomfortable reading. Nearly a million young people in the UK are currently not in employment, education or training. A review warned that figure could reach 1.25 million by 2031. A lost generation, the headlines said.

“The education, health and welfare systems are no longer fit for purpose in preparing young people for adult life,” said its author, former minister Alan Milburn. It's easy to feel helpless reading things like that. But I kept thinking: there's something we as parents can do - something that doesn't cost anything, doesn't require a financial planner, and might matter more than people realise in helping them prepare for adult life: talk to your children about money.

I know. Easier said than done.

The question they're asking

A client's son - I'll call him Fin - came in to see me recently. His dad, a longstanding client, thought it might be useful for him to talk to someone who does this for a living. Fin was in his mid-twenties, curious, and had one question he wanted answered: how much should he be saving in cash, how much in a pension, and how much in an ISA? Was there a ratio? A number?

It's a good question. Probably the question a lot of young people are asking - if they're asking at all.

My answer was that building a financial plan is a bit like composing a painting. You want something in the foreground, something in the middle distance, and something further away. Each layer has its purpose. None of them works properly without the others.

The foreground is your emergency fund - cash you can get to quickly when life throws something at you. Most people need three to six months' worth of expenses sitting somewhere accessible. The middle distance is medium-term saving: money that's not locked away, but working a bit harder than it would in a current account. And in the background, visible but not immediately reachable, sits the pension - the long view, building quietly while you get on with everything else.

It's not a formula. But it's a framework. And frameworks are something you can share.

Why young people are sceptical - and why that's actually fine

Here's something worth knowing about how your children relate to financial information. They've grown up online. They've seen things that look completely authoritative and turn out to be entirely made up. So their default position, quite rationally, is scepticism. When they Google "how much should I save?" they're not necessarily expecting a reliable answer. They already suspect there isn't one. What they're really looking for is someone to help them work out what the answer means for them.

That's where you come in. Not as an expert - you don't need to be. But as someone who knows them. Someone who can ask the right questions rather than hand down a number from on high.

Does your son or daughter live at home? Because the standard advice - keep three to six months' expenses in accessible cash - looks very different if their main financial exposure is a phone bill and a Netflix subscription. Not wrong, exactly, just less urgent. The foreground of their painting looks different to someone who's renting, or who has a mortgage, or who's just started a family.

That's the whole point. The picture changes depending on who's holding the brush.

What a good conversation looks like

It doesn't have to be a formal sit-down. It doesn't have to involve spreadsheets. In my experience, the most useful financial conversations aren't really about finance at all. They're about values. What money is for. What enough looks like. What you'd do if things went wrong.

Ask your children what they're worried about. Ask what they're saving towards, if anything. Ask whether they've thought about a pension - gently point out that the employer contribution is free money they might currently be walking past.

And if there's one piece of wisdom most of us wish someone had handed us earlier, it's this: time is the most powerful financial tool there is. The earlier you start saving - even small amounts - the harder that money works for you. Compounding means that returns generate their own returns, year after year. A modest amount saved in your twenties can be worth more in retirement than a much larger amount saved in your forties. It sounds almost too simple to be true, which is probably why we don't talk about it enough.

That's the kind of thing worth saying out loud to your children. Not as a lecture - just as something you know now that you didn't then.

You don't need to have all the answers. You just need to start the conversation. These things can of course feel awkward, but the more open we are about money - what we have, what we wish we'd done differently, what we've learned - the better equipped the next generation will be.

The painting analogy is yours to keep. Foreground, middle distance, background. It's a good place to start.