Many Canadian families feel ill prepared when it comes to teaching their kids about money matters, with some rarely, or never talking with their kids about the subject. This curriculum is not taught in schools; often students graduate with little financial preparedness. Ask a parent and they’re likely to say they find it difficult to talk about family finances with their children. While they feel it is their responsibility to teach these life-skills, they often face anxiety regarding what to say, what age to start, and how often to broach matters.
It has been said that kids mimic what their parents do, and as such, you may wish to take stock of your financial habits. You might be teaching your kids more than you think. Financial competency is not just about money – it’s about instilling values. Kids with strong financial skills have core beliefs that can help them become self-reliant, responsible, disciplined, with a rudimentary understanding of charity.
What does it mean to have the essential skills to use a budget, manage debt responsibly, and to save money? Focusing on six pillars: earning; saving (delayed gratification); spending (responsible choices); planning (goal setting); charity (giving back); and investing (relationship between time, money, risk and return) can create a solid foundation, increasing in sophistication as the kids grow older.
Never had a family meeting about money before? Your first meeting could involve creating a family mission statement designed to articulate the family’s financial values. This statement provides guiding principles for financial decisions, what the family stands for, and how the family uses its wealth. It doesn’t need to be overly complex, but it should be understood by all. The family mission statement should motivate and inspire, as well as be realistic and achievable. Once instilled, these values can be passed on from one generation to the next.
Nurturing financial competency can be a lifelong process, so you’ll likely want to start early. Simple tips could include giving a child a calculator when you go grocery shopping; asking a child to create a budget for a dinner or birthday party. Teenage kids could be asked to look at various cell phone packages and present the best one or, present a budget charting how they plan on saving for post-secondary education or a trip they plan on taking after graduation. For any age group of kids, consider having a family meeting on a charitable initiative and decide as a family who to benefit and why. Another idea could be to get annual reports for companies that manufacture products the kids use, and ask questions like “Who is the president?” or “How much did the company earn last year?”
Like exercise or learning a new language, you cannot get all the benefit with just one effort. A little effort applied consistently is likely to have the greatest impact.
Given the frequency of media messages your children are exposed to, wouldn’t you prefer they instill your values and beliefs around money?