A large chunk of Canadians have a spending problem, and that’s bad for all of us. The job market is shifting dramatically as we progress further into the digital age, and that’s bound to have repercussions moving forward. If you’re concerned about your children’s financial future, you’ll first want to prepare them for financial responsibility. Here’s some great tips on how you can help guide your kids down the right path.
#10) Lead By Example
Kids generally have an easier time learning when they see something happen, as opposed to hearing it. The same rings true for finances. You don’t need to school your 12 year old in the complexities of accounting, but you can get them involved via other means. Consider taking your children to the bank with you to make deposits or withdrawals. If they’re between 5-8, give them money and allow them to participate in a transaction, such as buying a candy bar. The earlier you teach your children about money, the quicker you’ll instill an understanding about economics and financial responsibility which you can grow on.
#9) Give Real-World Examples
The next time your 9 year old daughter ditches dancing lessons to take up horse riding, make sure she understands the financial ramifications. The same holds true for all children who would otherwise believe that their parents are a wellspring of unlimited financial funding. Break down the cost of your son’s individual hockey games or pieces of equipment. Speak openly about the cost of the hottest new video game, or the price of gas when your 16 year old takes the car for the evening. Breaking down costs gives children the opportunity to see what really goes into money, and how to budget accordingly.
#8) Encourage Comparison Shopping
This one is a little tough, especially if your kids are dead-set on luxury brands. It’s important to remind them of the value of comparison shopping. This can be done a number of ways, from having kids seek out a less costly brand of cereal at the grocery store, to comparing two sets of designer jeans and weighing the cost differences vs. pros and cons. Financial responsibility is all about spending within your means, and the sooner kids learn to refrain from splurging on items out of their price range, the better prepared they’ll be for bigger purchases, like their first car.
#7) Demonstrate The Value Of Saving
Kids tend to think that throwing money into the proverbial piggy bank is all there is to it, but don’t forget to let them know about the other benefits of saving. No need to break down the complexities of RRSPs and tax free savings accounts. Start simple, such as giving them real-world calculations of interest gained on a saved dollar amount. Once children understand the context of saving over the long-term, chances are their enthusiasm will go up!
#6) Use School To Your Advantage
Consider using math class and math-related homework as a springboard to teach them about financial responsibility. It’s a great opportunity to use basic math, fractions and percentages by referencing monetary examples. Your child’s school should be teaching this subject already, so put your own spin on it the next time your child needs help, and achieve two goals in one shot. They won’t even notice that you’re teaching them something new!
#5) Pup Them To Work, ASAP
No, we’re not advocating for child labor. Rather, it’s a good idea for your kid to get a job as soon as possible. Not only is it a great learning experience, but it’s the first chance your child will get to work directly with money that is earned, and hopefully saved by them. Once the money is in their hands, they must apply your lessons accordingly by budgeting and saving, which is invaluable as they exit their teens.
#4) Refrain From Credit, Use Cash
Today’s kids aren’t the only generation who mistakenly thought credit cards were an unlimited source of wealth. Just as we had to learn, so must they. Use cash when teaching your kids. It’s tangible and material. They can pick it up, count it, and spend it anywhere, which means real-time tracking of their finances. Credit Cards adopt a “set it and forget it” mentality which can teach a disastrous lesson to your kids about how to manage money.
#3) Stress The “Responsibility” Part
In an age of Amazon Prime, digital downloads and well-stocked supermarkets, it’s all-too-easy for children to forget the work that goes into maintaining a well-oiled economy. Often, the value of money doesn’t extend farther than the amount listed on the bill. Make sure your kids understand why financial responsibility is so important. Make them understand the work that goes into creating the goods they take for granted, including man hours, shipping costs and the like. Children who understand the work that goes into a product will be more likely to respect the process.
#2) Create Family Goals
The next time your children express excitement at visiting DisneyLand, help them understand the associated costs. Obviously this will differ depending on your child’s age, but try to incorporate them into the planning and help them understand the cost breakdown of the vacation. Include things like accommodations, fast food and ride prices so they know what you’re putting into the trip. If they can grasp even a bit of the overall price list, it will help them appreciate it more.
#1) Stay Firm, Stand Strong
If you’re confident that you’ve allotted enough to your child’s weekly allowance, then be prepared to stand strong when your child eventually runs out of money before the next payday. Not only will this teach kids to budget responsibly, but it will also encourage them to save for more expensive items that may take longer to acquire. No bailing your kids out or giving them more money. It might be fruitful to offer the incentive to earn more money in exchange for more work. Once kids understand these principles, they’ll gain a stronger sense of financial responsibility.
With the right amount of planning and some good old fashioned parenting, you can easily teach your child how to be financially responsible. It’s one part economics and one part discipline that will go a long way to ensuring their future success. For more information on how we can help with your financial planning, visit us today!