Teach your Kids about Finances
In these gloomy economic times, it's time to re-think the piggy bank! Start teaching your kids about finances now. Educating your children about money will give them that head start they will need in life!
Start them young…
OK, the piggy bank will do if they are very young. This helps them tuck away their birthday money. Teach your child the value of money: a nickel, dime, quarter, dollar, etc., and how they compare to each other (a nickel is more than a penny but less than a dime). Teach them how to count it.
As they get older…
Start them with a simple allowance, and a few savings and spending tips. Dividing their allowance: one-third for spending, one-third for saving, and one-third for charitable causes imparts a sense of responsibility. Review charities that may appeal to your child.
Teach them that money comes from working, and that everyone has their own job, including children. Consider giving them simple chores such as cleaning their room and helping out with small tasks around the house.
Teach them the difference between needs and wants. Your child needs a coat for winter, but he wants the latest video game. Which is more important? (OK, we didn't say this was going to be easy!)
The grocery store is often your child's first spending experience so take the opportunity to review the grocery list and how to plan your purchases. Comparing prices at the store is a great means to demonstrate value and quality. Encourage your child to review flyers for sale items and to find coupons of items you purchase regularly.
Make a trip to the bank and open a savings account. Let your child fill out the deposit slip and explain how the bank pays interest. It's a great way to introduce the importance of saving.
Teach them about credit cards, cheques, banks, interest, and more advanced types of finances. At this stage you'll want to teach them how to budget their money with the help of their weekly allowance.
Review your child's Registered Education Savings Plan statement with them and explain how the investments are performing. This is an excellent tool to help your child learn the importance of long-term financial planning.
Review where the money goes in the family: electric bill, water bill, mortgage, car payments, insurance, groceries, clothes, etc. This will reinforce the importance of working for money and that it should be spent wisely.
Don't forget to be a good role model for your children. Communicate your values and experiences with money. Let them see you as being "money smart" as children tend to follow their parents' personal finance practices.