The benefits of speaking to kids about money management early!

As parents, we place a lot of emphasis about speaking to our kids about certain topics from a young age. Whether it’s about eating healthy, consent, how to act in public, or how to behave in general, there seems to be one topic that some of us don’t speak to our kids about. That topic is MONEY! A 2016 survey by TD revealed that only 58 per cent of Canadian parents have spoken to their children about money management before the age of 16! And we really can’t just rely on teachers to teach our kids about money management. Parents share that responsibility. As a parent, it also helps to invest in learning about finances such as the ira gold rollover guide which you can soon teach your children.

My Personal Experience with Money Management

Of course, there are different ways to talk to your kids about money whether directly or indirectly. As a kid and a new immigrant to Canada, my parents discussed money with me indirectly. Specifically, whenever I wanted the latest and newest toy, they either say “No, it’s too expensive, we can’t afford it” or “If we find it at a garage sale, you could have it.” I learned that you can’t always get what you want, and that some things, you need to wait and buy when you can afford them. Of course I didn’t “LIKE” this lesson, but if nothing more, it made me eager to start working as soon as possible to start earning my own money and becoming financially independent. I started my first “real” job when I was 14 working in a dry cleaner. None of my friends had jobs, but I loved it! It gave me a sense of pride, and more importantly, disposable income. I’m proud to say that I’ve been financially independent almost exclusively since then, even paying my own way through university without taking out a student loan.

Teaching My Kids About Money Management

When it comes to my own kids, John and I made the decision to teach them about money management from an early age. Our oldest son Kyle would ask us to buy him a lot of things. While we could afford to, we realized it’s also a great exercise to teach him how to save. We decided we would give him a weekly allowance. If he wanted big-ticket items, we would write those down on a list and buy it for him for his birthday or one of the holidays OR, he could save up his allowance for it. Little things we would either buy for him or he would have to pay for, depending on the frequency. This past summer we even opened up a savings account for him where he deposited $50. We taught him (in layman’s terms) that the longer he saves his money in his bank account, the more it will grow (compounding interest) but it’s also a great way for him to learn to SAVE. It’s not as easily accessible once the money is out of his wallet and out of the house. Now that Ryan is almost 4, we’re going to start doing the same as we’re seeing that he is also asking us to buy him toys more frequently. We bought him a wallet and are giving him allowance to start teaching him about this very important life skill.

START EARLY

Developing healthy habits starts at an early age. According to TD, “as children grow so do their understanding of money concepts. Starting the money management conversation with them early on is only the beginning – continue and tailor the conversation as they age.”

For Financial Literacy Month this November, Paul Orlander, Senior Vice President of Personal Savings and Investing at TD Canada Trust, and co-chair of TD’s Financial Education Council, offers the below guidelines to help parents tailor money lessons to each child’s age and developmental stage. Furthermore, parents can check out TD’s Smart Money Toolkit for more tips and resources to help them educate their children on smart money management practices.

• Under 6 years old: At this stage, children are interested in the different shapes and colours of money. Handling real money can help them learn more about it. So, give your child some shiny coins they can put in a jar or piggy bank to watch their savings grow. Although preschoolers may be too young to understand the concept of money, they are learning to count, and have a basic knowledge of quantities. Make the experience of adding to the jar a big deal and as the number of coins grows, swap them occasionally for the equivalent amount in crisp bills.

• 6 to 9 years old: Generally, seven- and eight-year-olds understand the concept of saving, but they might not yet understand what’s fully involved in paying for all the latest and greatest toys they want. The balance of saving and spending can be reinforced by giving your children a small allowance, explaining to them how long it will take to buy something they really want. Children at this age have usually grasped basic math skills like addition and subtraction, which can help them learn the value of money.

• 10 to 15 years old: Teach pre-teens how to use their bank account, such as making deposits and withdrawals, and responsibly use a debit card. They might start to earn their own money through odd jobs or babysitting, so now might be time to ask them to cover some of their own expenses. Teens are often developing their plans for the future – looking ahead to college, university or a big trip – so it’s a perfect time to introduce them to the concept of setting financial goals and investing early to take advantage of compound interest. It is also important to teach teens about the importance of credit and how a credit card works.

• 16 to 18 years old: Your child may be less financially dependent on you now, especially as they start earning more money through a part-time or summer job. They also may be taking on more responsibility to pay for regular bills, such as monthly mobile payments, and saving for bigger purchases, such as a car. Sharing the family budget will help your teen learn about real-world costs and keep their expectations in line with your family’s financial reality. Furthermore, sit down with your child and help them set up their own budget tracker, so they too can track where their money is going and how to set spending priorities. Introduce gold dealers Adelaide if they’re showing interest in investing in gold. Saving for retirement early and for a rainy day are other topics of discussion to consider having at this age. Additionally, introducing the concept of life insurance is valuable for their financial education. Get the cheapest life insurance at Affordable Life USA when the time is right for them.

November is Financial Literacy Month. Make it a point to set up some goals to teach your kids about money management. For further insights, check out this TD report – State of Financial Education in Canada.

What tips or advice would you give parents for teaching kids about money management?

Disclosure: I received compensation from TD as part of my participation in their Financial Literacy Month campaign. All opinions presented in this post are my own.