Never before in history have young people witnessed their contemporaries earning so much money. For the first time-ever, young people (and please don’t call them “teens”) no longer have to be a fiscal drag on their parents: they are economically liberated, engaged and have the cultural and creative skills to create their own wealth right now, and they’re doing it. What is needed is nuanced guidance from someone older, wise with hard-learned lessons about the mercurial nature of money, who can tell them what to do with their earnings.
My children and their friends used to work on a fruit farm during the school holidays, undertook some voluntary work, and got their Duke of Edinburgh badges. But they also designed t-shirts, wrote and sold music, traded books, vintage clothing and records, all online. They made more money in a single evening of creative endeavour than a whole season on the fruit farm. I was amazed and impressed at the profit that could be made from flipping a Pink Floyd album or a rare edition of a Game of Thrones novel.
Where are we now?
That was 10 years ago and the digital upheaval since has been seismic. Combined with the ease of digital banking, the proliferation of streaming and decreasing cost of technology, budding entrepreneurs have turned their bedroom trades into fully fledged businesses and are making a very decent living from it. Some are making an absolute fortune. On Twitch, the Amazon-owned streaming platform where people gather in their tens of thousands to watch people play video games, personalities are grossing £150K-£500K a month, attracting brand endorsement and partnerships, joint ventures and much more.
Now, not everyone can be a professional gamer but it is worth noting that young people today, like older people, want, if not expect, a continuous income stream. The dream of a stable 9-to-5 has been replaced by the ever-on ‘hustle culture’.
What can we do to help?
But, to temper this desire, what they need is guidance from advisers who are more nuanced, experienced, wiser. They need people who can assist them in making informed decisions about money and help avoid getting into bad habits, not to mention the industrial level of scamming present online today.
So what can we do to support:
- Start with the basics. Explain and show how the banking system works
- Explain and show how to prepare an income and expenditure statement together with a cash flow forecast
- And then show how it helps inform better decision making about money
- Many financial institutions provide good budgeting and cash flow apps for young people. Some, will provide pre-paid cards with spending limits and controls that parents can assist with.
Where a surplus is being created explain and show how that can be accumulated as a buffer and, in time, become a nest egg for the future.
Young people will have instant access to all the best savings rates so product information is not the issue here, it’s all about good money decisions. For example, don’t make important money decisions when you are under pressure, looming deadlines to meet, or unwell. With today’s youth more focussed on well-being than previous generations, you may find it is easier to create these good money habits than you expect – the debilitating stress of debt is certainly ‘not a vibe’.
Pressure to flash the cash is all around – from Instagram dream holidays to unrealistic TikTok trends – so try and get them to think of their future self and what their future life may look like.
Might you be in a committed relationship, have a family? What does success look like?
Impossible questions for a teenager but it might just make them pause for thought.
Good money habits are not easy to get into and, in the digital age, instant gratification is an insidious ever-present temptation that can have a very damaging impact on your child’s future plans. Be open and supportive, lean into their skills and accept you may not know it all, and you might be able to build a stable, comfortable future for them together.
If you want to discuss how we can continue to support and empower our younger generation to be more aware of their finances, please contact us today.
Richard Watkins, Certified Financial Planner at Continuum
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice, you should seek independent financial advice before embarking on any course of action.