5 Ways to Raise Money Savvy KidsSep 09, 2019
Parenting is tough gig but thankfully, raising children who are financially savvy is not difficult. Fostering a healthy relationship with money contributes to a child’s confidence and reduce the intimidation or “taboo” factor about discussing finances later in life.
Over the years I’ve experimented with my own children to teach the value of a dollar saved and spent, and while it may be easy to talk about money to your children, it’s better to jump in and take action. With that, I’ve made a short list of the top 5 things you can do to get your kids on the right financial track.
Set up a bank account
When a child’s piggy bank can no longer hold the gift money, it is time to open a bank account. Digitization has eliminated the good old days of a weekly bank visit to have the teller update your bank book transactions. Despite this, your child can still experience the thrill of financial independence by signing up for an account online.
The best option for a child’s bank account is a no fee, high interest savings account. A great place to compare options is through RateHub.ca. Have your child experience the process by selecting their own security passwords (just don’t forget to write them down!) When the bank card arrives in the mail, celebrate the occasion as they place that shiny new card into their wallet.
My two older children have debit cards with a (no fee) chequing and savings account. They divvy up a portion of their funds into each account and use the chequing for their purchases, while watching their savings grow. I recommend logging in to your child’s online account with them every now and again. Both are surprised at how quickly their chequing account funds dwindle but loves to see the progress made on their savings account.
A bank account makes your child accountable for their spending behaviour and encourages delayed gratification – one of the greatest money habits you can teach your child.
Help your kids with their money goals
The power of delayed gratification is an important skill and one that will help your child learn financial independence. Why? Although credit is very easy to obtain, it makes it easy to spend – and get into debt. When children understand the concept of saving to reach their goals, they appreciate the time and effort it took to attain their goal.
Setting goals can be a simple and fun activity but requires adult supervision to ensure the goal is age appropriate and attainable. You can encourage your child by keeping them focused with a picture of the object or experience they are saving towards, and perhaps offer to pay for half if you know it will take the child longer than 6 months to reach the goal.
Don’t be surprised if they change their goals; this is completely normal! Talk about it and track their progress by reviewing the account with them every now and again.
Teach your kids gratitude
There’s no easier way to raise compassionate and caring children then by teaching them to give to others. A simple way to instill this is to start with a small amount, say 1% of their money gift, and set it aside in a donation piggy bank. When your child is ready to make the donation, consider matching the amount and sharing the experience with them.
It was difficult for my youngest to understand how her money was helping others, so we introduced her to the Gift of Hope by Plan Canada. The stories and images allowed her to appreciate the impact of her donation, and it has now become an annual holiday tradition in our household to provide gifts for other children through this charity.
In addition to financial donations, it’s worth considering other ways to give back to your community, either through volunteering or donating old toys. Children love helping others, and this is one of the easiest ways to help them express their ability to give.
Take them shopping
Ok, this one requires some patience and time but is worth it in the long run. Grocery shopping is a fantastic way to introduce the concept of value and enhance their math skills. When my children were about 5 and 7, I would put them in charge of selecting yogurt and cereal. The rule? It had to be on sale.
On occasion, there would be tears and drama when the cereal they wanted was not on sale, but once they realised I wasn’t going to budge, they comprised and selected a box. Much older now, it’s become instinct for them to price compare by quantity and quality. My eldest loves Costco because he enjoys comparing the individual unit price to the quantity received and determining whether it’s a good buy or not.
Finding a good deal is always fun, but it’s even better to watch your children apply the concept of value and cost. It will help them grow into money-conscious (and mathematically skilled) adults, and maybe save you some extra dollars along the way.
Talk openly about finances
I can't stress this one enough. It can be awkward for those who grew up in households where money was never discussed, but it’s important to start with your children. Money shouldn't be kept a secret and age appropriate conversations about finances will benefit everyone.
Money doesn’t have to be boring or complicated. It’s all about finding what works for you and your kids, so give it a try and have fun with it. I’d love to hear what has worked for you and your family!
Stephanie Wolfe is an Accredited Financial Counselor of Canada (AFCC) and the Founder and CEO of Wolfe Collective Wealth Inc. She is a passionate advocate of financial wellness and empowering women to take control of their wealth. She resides in Toronto with her husband and three children.