Q&A: Starting young with money

Jonathan Whan, Associate Planner at Acumen Financial Planning | Acumen Financial Planning

As a former teacher, I have heard this question asked all too often by children and young people.

It is a question that feels increasingly difficult to answer, given that any attempted explanation is now frequently met with some variation of: “But I can just use AI...”

While there is certainly some sentiment in the point, the important distinction is that having access to the information is very different to knowing how to apply it when it matters. This is where the true value in establishing good money habits early in life really lies.

Learning to save, understanding the difference between needs and wants, and recognising the benefits of planning ahead are all lessons that can have a lasting impact. Even modest amounts saved regularly can grow significantly over time.

However, developing a regular savings habit early in life is often more important than the amount being saved. One of the most valuable lessons young people can learn is that saving is not about what you are giving up today. Instead, it is about the opportunities you are creating for your future.

From pocket money, to payslips, to pensions

As young people move through their teens - opening their first bank accounts, taking on part-time jobs, and managing small budgets independently - they begin to face the practical realities of managing their own money.

The move into full-time employment brings further financial decisions that they will not have encountered before. And this is where the lessons learned early can really add value.

One of the most significant of those decisions is whether to remain enrolled in a workplace pension scheme. Retirement can feel impossibly distant to someone at the start of their working life, making it easy to overlook the opportunity.

Yet those who have already developed a saving mindset will be better placed to appreciate the benefits of starting early. The reason is simple: time is one of the most valuable assets available to savers and investors, with money invested over several decades having the potential to benefit from compound growth.

Starting early can therefore make a significant difference to future outcomes, even if contributions begin at modest levels.

While AI can undoubtedly help explain financial concepts and equip us with information, it cannot develop habits on our behalf. By helping children and young people understand the long-term advantages of good money habits, we equip them with not only knowledge, but with behaviours that can support sound financial decisions for the rest of their lives.

As young people move into adulthood, the financial decisions they face will naturally become more complex. At that stage, engaging with a financial planner can help them understand their options, plan for the future and build on the good financial habits developed earlier in life.

Having that support can bring confidence to the decisions they make as their needs and priorities change.

Acumen Financial Planning Ltd is authorised and regulated by the FCA, FRN 218745. The content within this article is for information purposes only and should not be regarded as advice.  

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested. A pension is a long-term investment, and past performance is not a reliable indicator of the future.