The kids are back in school. But are they learning much - if anything - about how to manage their money? Few schools teach students about the personal financial skills they will need for the rest of their lives.
Even if you aren't a perfect role model, you can give your (grand)children knowledge and experiences now which will help them make better money moves in the years ahead.
Here are some easy yet Agency of Canada guidelines. In general, talk about money when children are around, starting with basic concepts for young ones and building on those in later years.
- Ages four to eight: Although it's a challenge when children see ATMs producing seemingly endless banknotes, explain that people have a limited amount of money. So they must make choices: spend money on one thing and they will have less to spend on something else. Divide allowance money among saving, spending and sharing.
- Ages nine to 14: Time for the young'uns to learn the difference between needs and wants. Time to set up a savings program for immediate and longterm goals, building on the "limited funds" lesson taught earlier. Identify regular family financial commitments; point out the relationship between income and expenses.
- Ages 15 to 18: Explore payment means (cash, debit cards, credit cards) - and the cost of borrowing. Explain the personal value of money - the satisfaction derived from the goods and services bought, and how to make wise spending decisions. Explain the various investment instruments - GICs, stocks, bonds, mutual funds, real estate - and the concept of risk and reward. Even broach the subject of income tax.
Take advantage of "teachable moments" - opportunities to teach or reinforce financial lessons.
For example, whether shopping in a store or just looking at ads in the paper, you can explain about sales and shopping around for the best deal - as well as the cost of borrowing especially with a credit card that isn't paid off each month.
Mike Grenby is a columnist and personal financial advisor. Email [email protected].
