I’m concerned about the number of children who are not being taught money management by their parents or our school system. I believe that teaching children about money and finance should be as basic as discussions about healthy eating.
A good resource for parents is a financial blog published by Tamar Satov called “Raising Money-Smart Kids” at FinancialDecisionsMatter.ca She says that money discussions should begin as soon as children understand what money is and what it does.
Being one of six children raised on a mixed farm in Great Britain, I started learning about money early, as we all had chores to do ranging from picking up milk every day from the farm dairy to helping in the garden. Later I mowed lawns around the village, then helped pump gas, change oil and fix tires at a local garage.
Our parents believed a weekly allowance was a great way to teach us about budgeting, saving, and making our own purchases. They started by giving us pocket money to buy candy bars, tickets to the local movie theatre and fish and chips afterwards. Their rational was that, having money of our own would give us some stake in deciding how to spend it. They taught us the value of a pound and how to delay gratification. We learned this by saving our allowance to reach some savings goal for new jeans or a soccer ball, or alternatively spending it on candy or pop. Small allowances ensured that the cost of making financial mistakes wasn’t high, and we could learn from the process.
When I was old enough to work on the farm I can still remember the thrill of getting my first pay packet in a square brown envelope. Ten shilling was a fortune back then, but it gave me a degree of financial independence from my parents. Knowing the value of money, of saving and working hard to get ahead, have served me well in the 44 years I have lived here in Canada.
Today it’s not uncommon to see young kids running an old-fashioned lemonade stand which is a great way to learn about how business and money work. By taking them to the store and purchasing the ingredients, they can understand how much the supplies cost, and how much they have to charge to make a profit selling the lemonade.
When working with young couples I am often surprised to find they don’t seem concerned about carrying balances on credit cards at interest rates up to 22%, nor do they reconcile their charge slips against their statements. It’s essential that your children understand how those convenient credit card purchases can end up costing significantly more if they don’t pay off the balance every month.
If parents hope their children will attend university or college they need to have some frank discussions with their teens about how that education will be funded. This should include how much the parents are willing to contribute, how much their children are expected to contribute and what assistance may be available to make up the difference. Parents need to look at these financial discussions as empowering, as kids feel more secure if they know there’s a plan.
If you think you need some help teaching your children about saving, find a trusted financial advisor to help you. They can help you set up a basic saving account that can help your children start a saving plan.
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