As technology advances each day, it becomes more common for children and young adults to become more connected to the world. Although being able to experience more of the world at a young age has many positives, it also comes with downsides, especially when it comes to dealing with money. A quick search on google will come up with lots of results about young children spending money on apps or shopping online, sometimes racking up bills in the thousands, much to their parents’ dismay.
With this in mind, here are 5 financial tips which we believe are important to instill into your children from a young age:
“Do you really need this right now? Or ever?” Children tend to have poor impulse control, so it’s extremely important to help them manage that from a young age. They should learn to be okay with not spending money as soon as they get it. Help them manage their impulses by making them wait some amount of time to spend their money after receiving it.
A lot of the times, when children are given allowance, they just see it as magical money that falls from the sky, and as a result, have no real appreciation of it. Children who never learn to appreciate money become what’s known as “spoiled”. Help children learn the value of money when they’re young by making them earn allowance by doing extra work. Also, encourage them to get a job once they become a bit older to teach them that money doesn’t come as easily as they may think.
Every time they receive any money, encourage them to set some aside first before even considering spending any. Whether it’s from their allowance or from their wages, establishing a good savings habit now will help them build a more stable financial future. Consider helping your child open up a bank account, and teach them how to deposit money into the ATM
Although schools are slowly adding financial literacy to their curriculum, good financial information is still largely unavailable to children. It’s really a shame, because good habits are more easily established at a young age! With the amount of resources available on-line and the prevalence of books relating to financial education, it should be fairly easy to help your child get a good grasp of finances when they’re young.
Start with tracking cashflow, and then eventually move towards a full budget. Help them figure out how much money they can expect weekly or monthly. Then, from there, decide how much they should be saving each month, how much they have to spend on fixed expenses (such as phone, or Netflix). Finally, see how much they have leftover to spend on their activities such as going out to eat, or buying video games. It’s likely that they will be surprised on how little they have left over after their savings and expenses!
Not only can you help your children learn at home, there are now programs slowly being developed to help children in school as well!
One organization is Junior Achievement Canada, which provides financial literacy programs to children in school from young to young adult. Take a look at their selection of programs here, and consider finding out if your child’s school is eligible for JA Canada to set up a program there.
Another good resource comes from the chartered professional accounts of Canada (CPA Canada). They offer programs which you can access from home to help your children understand the fundamentals of finance. You can find their program for children here.
Finally, There is Money school of Canada, whose mission is to “create a new generation of financially-savvy, young Canadians”. Check out all these resources to make sure your children are adequately prepared!
FlexFi Inc. is not a financial advisory firm.
This article is for informational purposes only and is not a substitute for individualized professional advice.
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