It’s never too early to teach kids about money.
My parents sheltered me, for the most part. I really wish they hadn’t. Growing up understanding even a little bit of common-sense money knowledge would have prepped me better than what I experienced on my own.
Kids Learn Quickly
Why not start your kid off with a piggy bank? The best ones are clear glass, so the child can see the money as it accumulates. A couple quarters one week, maybe a loonie the following week. Seeing is believing!
Kids learn with real experience. If they want that toy, teach them to physically remove the money from the piggy bank and hand that money to a cashier in store. Hands-on knowledge.
As They Grow
As they get a little older, practice what you preach. Show the child solid money management. Don’t argue with your spouse about money, at least not in front of the kid.
Kids are impulsive. Heck, most adults are, too. When you’re with the kid in a store, teach them to take 24 hours before they spend on a larger purchase, even if they have the money in hand. Sit them down, count the money out, talk about how important that toy is, and let them sleep on it for 24 hours. Don’t just do it with the kid – practice what you preach!
More Than Just Allowance
Most parents give some sort of allowance. I suggest parents stop the handout and make the kid do chores, even if it’s quick and simple. Let them learn how to budget based on the work they put into earning a few bucks! It can be simple tasks – they’ll get the picture.
Bank On Savings
As kids age, even to 10 yrs or so, help them set up a bank account and teach them to use it on a regular basis. They need to know their money is safe when in the bank, and that the money leads to even a small interest growth.
I Want, I Need
As the kid gets into early teenage years, they start to compare their life to others that they become friends with. They’ll want trips and vehicles, etc. Your job, as parent, is to show them that an old Ford truck gets them to school just as fast as your neighbour’s caddy. And rather than put extra cash into a fancy car, maybe the savings from an old car can get you a nicer summer vacation. The kids need to learn that you can be happy in your own financial space.
Moving On In Life
Teaching your child to save for further education will teach the kid valuable skills in planning for the future, and helps their own planning for college or university. Not only is savings essential for post-secondary education, but making money leading up to it, as well. Encourage them to find responsible part-time earnings in high school, as well as full-time work during the summer months. Make them a part of their own future.
Life With Credit
Help teach your kid to be wary of credit. Banks push credit cards at the age of 18. That kid, who struggles with finances while furthering education, will often be drawn into a world of credit too quickly, and too easily. Once trapped with high credit balances and high interest rates, it makes life tough. Scoring a business card is a double-edged sword.
Speaking of Credit – Student Loans
Try to steer that kid away from a life with student loans. Push for savings before they ever get to post-secondary education. Encourage them to hold part-time employment and apply for scholorships. Look into a line-of-credit instead of that higher interest loan. And if credit is needed, make sure you teach them about interest rates, minimum payments, and how it all affects the credit score.
You might also suggest they live at home as they start college or university. Weigh the pros and cons of living at home versus living in residence. It’s a great experience to be on your own – do the math to see what could work for you!
We all know someone who was saddled with student loans for many years after graduation.
And That’s a Wrap
Learning about money is a life-long endeavour. Stay with your child, each step of the way. Take the time now to encourage them to have smart money skills.