by Deneen Cunningham, McVagh Cunningham Group Ltd. –
There are many ways to instill smart money management from an early age.
It’s time to have the “talk” with your children. No, not that talk – we’re talking money. Now is the perfect time to introduce your kids to simple lessons on how to save and how to spend. Here are some fun tips to put them on the right track to financial success:
Set a good example. Children are like sponges, which means they listen to and absorb everything you do – and that includes your financial habits. Show them your spending plan and let them see how you save before you spend.
Start early. Piggy banks are fun for even the youngest children (and we admit, they’re fun for adults, too). Teach them the value of each coin and how they add up.
Use real-life events. Shopping, errands and planning a vacation are great teaching moments for you and your children. Explain why you make the money decisions you do, and ask them what they would do if they were in your shoes.
Go beyond spending. Often we only teach children how we spend. Take them along when you save, donate and invest to teach them the full spectrum of money management.
Explain needs vs. wants. Every time your children say they want something, ask them to think about whether they really need it or just want it. If they think they need it, ask them to justify it. Can they live without it? Will they use it for a long time or will they tire of it quickly?
Give an allowance. Giving your children a set amount each month will give them a head start on budgeting the money they have. While there’s no consensus on the chores-for-cash debate, sticking to the allowance agreed upon and refusing to give cash advances can teach them valuable money management lessons.
Make saving more interesting. Consider paying interest on what children manage to save from their allowance. They’ll realize the tangible benefits of saving and will be less inclined to quickly spend their pocket change.
Have them create a financial security plan. Help older children brainstorm ways they can use their time and talents to start their own small business, such as dog walking, babysitting or raking leaves.
If it were up to us, Financial Security Planning would be a mandatory subject in school. As it stands, it’s up to you to give your kids a good base to understand and manage their money. It’s also a valuable task – financial smarts will help them develop their math, planning, logic and reasoning skills.
For more information visit www.mcgltd.ca.