7 ways to introduce your kids to financial management

It seems that talking about money is still taboo in a lot of Quebec families. It’s quite normal to feel you don’t have the words or to think you’re ill-equipped for the task. Even if it’s impossible to predict the questions your kids will have on the subject, there are ways to broach the topic and help prepare them to deal with their future obligations.

Here’s some informed advice from François, a father of young children, and Diane, a mom with teenage kids, to help initiate your brood to saving, from childhood to adolescence!

For grade-schoolers

If your child is in grade school, you need to find examples he or she is familiar with, simple situations that will interest the child. Don’t be surprised if these kids, with their ever-curious brains, start asking you questions about money on their own. That was the case with François, father of three boys ages 4, 7 and 10, who tries to get into the subject more deeply with his kids whenever they have a question. “We talk about money once in a while, for example, my oldest will ask why so-and-so doesn’t have a house? The discussions usually spring from their questions, they are intrigued by the subject,” he said.

Here are 5 activities that can help your child become more familiar with money

1. Open a savings account for them

Start by depositing his or her allowance or any cash gifts they’ve received with them (in whole or in part, that’s up to both of you) in a savings account. Then sit down with them from time to time to see how much they’ve accumulated. That way they’ll have a better grasp of how savings and interest accumulate. The idea could be to let the kids enjoy their money the way they want to, but at the same time guide them into adopting healthy saving habits, just like François tries to do.

“My two oldest get an allowance of around $2 to $4 per week. We asked them to set aside two thirds of their savings for the project of their choice over the medium to long term.”

At the same time, to help them understand the value of things, François likes to use objects from his kids’ everyday lives. “We explain that it’s important for them to take care of their possessions. For example, not to throw their scooter down the stairs because it will break and we won’t be buying them a new one. They’re impressed by the fact a scooter can cost $100, it’s a huge number for them!”

2. Give them a small budget to organize a special activity

Whether it’s for a family vacation, a trip to the water park, an evening at the movies or a restaurant, for organizing their birthday party or for buying Christmas gifts for the family, help them figure out how to best spend a fixed amount.

3. Ask them to help with your daily purchases

Why not have some fun by making the grocery list as a family? Consult your children on that week’s menu by asking them to choosing foods they like to eat. They’ll gain a whole new outlook on the importance of spending wisely. It works for François and his kids, at least when it’s time to choose between yogurt and cereal! “It’s also a great time to discuss how some foods are healthier than others… we try to limit our consumption of processed foods,” he said. It’s also a good time to get into the topic of the power your child will have as a consumer when he or she is older. For instance, making them aware of the importance of buying local and supporting Quebec-based businesses instead of multinationals.

4. Pay them for out-of-the-ordinary chores

If you’re like François, you might believe that kids should not be paid for doing everyday household chores, as everyone has to do their part. “For housekeeping tasks, there’s no pay as these are things we need to do as a family. So everyone clears the table, puts dishes in the dishwasher, empties their lunch bag, takes out the garbage and the recycling, puts their clothes in the laundry, folds and puts away their clean clothes afterwards, etc.” On the other hand, when it comes to bigger, seasonal jobs like raking the leaves in fall or shoveling snow from stairs and balconies, there can be some compensation. It’s up to you to decide how much!

5. Teach them the difference between needs and wants

Your children are growing up fast and so are their needs and interests. To help them think about the value of the objects they love, suggest that they donate an old toy or item of clothing to a charitable organization, before they replace it with a new one.

Use the iAllowance app
This application (also available in French) can help your child
manage his or her money and have fun doing it!

For your high-schooler

Being a teenager means getting those first paying jobs like babysitting, mowing the lawn or delivering the local paper, and also their first real jobs, whether at the local ice cream bar, summer camp or restaurant. It’s also a time when those cravings for independence and freedom can get a teen thinking about buying their first car. Here’s where the concept of money and the real value of things starts to make more and more sense. With teens, you need to keep things as simple as possible, showing that you’re open and transparent. Diane, mother of two girls 12 and 15, picks key moments to talk about money with her daughters. “When we shop together, it’s a great time to talk about the value of things. The recurring question in our family is: do you really need that? We’ve always been reasonable, we don’t make frivolous purchases. I try to get my girls to make choices according to their real needs.”

Here are 2 methods that can make talking about savings and personal money management with your teen easier.

1. Talk openly about money

Explain to your teen that he or she can make the money they save grow. Show them the real truth about credit cards, even if they are only available to people 18 years and older, so they’ll be better equipped to use theirs responsibly when the time comes. Yes, they’re practical, but they had better understand the basic principles of interest charges and high fees that might be triggered. On this topic, you might want to share the errors of your own youth or your own inspiring stories with your teen.

Try to gauge your child’s interest in money matters, every person has their own passions and interests, so try to tune in to them! “My oldest is not really interested in money, she’s more interested in getting that must-have trendy item of clothing. My youngest, on the other hand, is more interested and much more of a saver. Her father tries to explain to her that she’ll never make a cent in profit if her money gathers dust in her savings account,” Diane said.

Finally, involve your child in drawing up the family budget or, if you’re uncomfortable opening up your books, try using our budgeting table as an example. To better prepare them for the world out there, explain all your current expenses such as the mortgage, hydro, insurance, etc.

2. Show them it’s important to establish medium- and long-term goals

The prom, a school trip or a summer getaway camping with friends, the more a teen focuses on a goal, the more they’ll want to reach it! By the same token, you can also sit down with them and establish a time frame for them to save for the latest digital device or even a first car. Your teen will have a clearer picture on how to reach that fixed financial target.

When your teen is old enough, he or she can find themselves a summer job and you can help them draw up their resumé and encourage them to start putting money away in a bank account. Show them the advantages of automatically depositing part of each pay in a savings account. It’s practical, easy and such a great habit to start early in life! That way when the chance to do something really awesome like buying a first car or going on an international student exchange arises, for example, the goal will become more realistic and attainable.

There are a number of ways to initiate your kids into the world of money, but remember that teaching by example has always been a pretty good way, too!