Youngsters influenced by parents’ money habits

Young people are heavily influenced by the actions and habits of their parents, a new study from the Money Advice Service has revealed.

The research surveyed over 1,000 youngsters aged between 15 and 17 about the way they manage their finances and their own attitudes towards money, including if they or their family save for unexpected costs.

It found a young person’s money habits are significantly influenced by their parents' past and present behaviour.

Indeed, mothers and fathers are the main financial role model for children and the study confirmed they rely on them for advice and help on money matters.

When it comes to taking advice, more than three quarters of respondents (77 per cent) said they find their parents' financial knowledge most helpful, while 17 per cent ask financial institutions, 12 per cent consult friends and eight per cent turn to teachers. 

However, 15 per cent said they do not seek help on financial matters from anyone at all, meaning they could end up getting in money trouble.

According to the results, if a family finds it difficult to cope with saving for emergencies, the younger members will become less confident at managing their own money and are therefore more likely to develop negative money habits.

For example, two thirds of 15 to 17 year olds (68 per cent) from families who can save for emergencies tend to put money aside for themselves, but this falls to 47 per cent among young people from households who cannot save for emergency costs. 

Meanwhile, over half (53 per cent) of those from families who can pay bills or loans find it easy to live within their means, though this figure plummets to 29 per cent among young people if their family cannot pay.

Caroline Rookes, chief executive officer at the Money Advice Service, said: "We know our money habits are formed very young, and once formed extremely difficult to shift. But I am struck by how heavily a young person’s money management habits are influenced by their family’s past and present financial behaviour."

By Amy White