Kids & Money

You have a kid! You have (some) money! You want your child to learn all about this money thing, perhaps earlier than you did. What is the best way to teach someone all about money? Teaching kids about money is so important for establishing good habits and understanding that money is just a tool to be used.

• DO talk about money (what it does, what it is used for)

• DO use positive money language (“We are planning to use our money for our family goal” or “We are saving our money for that trip (to the festival), so we haven’t planned to buy that new toy/buy that snack.” Language that shows intent and planning helps guide behaviour, instead of the often-heard (and sometimes felt) “We can’t afford it” or “We don’t have (the) money.”

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Teaching Money Habits

• Encourage reflection on NEEDS and WANTS. We need food, clothing, shelter. We don’t need the latest iphone, name-brand shoes, or video games. Sometimes wants can really feel like needs – even to adults.

• Introduce tasks and helping out around the house *before* starting an allowance

• If giving an allowance, approach it as a way to share in the family finances

• Recognize that receiving money (gifts or earned income) and spending it is an opportunity for kids to learn about good money habits

• Talk to kids about their goals and what they want to spend money on, what they want to save for (longer-term) and what the options are for giving back (the holidays are great for talking about sharing wealth)

• Help your child set guidelines for money received. A 50/50 rule can work: 50% to savings (start the habit early) and 50% for spending (or saving for short-term goals). Spend/give as appropriate for your family (ex. money aside for donation to a favourite charity or hospital, purchasing gift cards to donate to a food bank, etc).

• Let kids spend their money. This means letting them make poor decisions/buy things you don’t agree with. If they want to buy some junky plastic, let them (unless there is a no plastic rule in the house). My kids like to spend money on ice cream in the summer. Allowing (safe) choices to be made, even if we don’t agree with them, gives children the (self) control they will need later in life, when there isn’t someone there to guide each purchase.

Allowance

• This is a family’s personal decision, but here are some thing to consider, regarding giving an allowance:

• Do you want to tie allowance to chores? Or general participation in the household (chores/tasks/homework/respect)?

• Will you give a set amount per week/month, regardless of participation?

• Are there guidelines to how the money is saved or spent?

Kids can be resistant to learning about things that don’t make sense, and some money concepts can even be difficult for adults to consistently implement. We learn valuable lessons from our experiences—especially our money mistakes. The best time to make mistakes is when we’re younger, and without the consequences that we may have as bill-paying, family-supporting adults. The habit of saving for a rainy day—or an opportunity—is an important foundation to try and encourage children to learn.

When talking about money, keep it light and choose words carefully. Is it always true that “we can’t afford it?” or is it that we’re choosing to use our money somewhere else (even if that choice is for a need)? Remember to try phrases such as: “We didn’t plan to buy that today.” or “Remember our goal to go to a restaurant next week? That’s what we’re using our money for.” If possible, make it fun! We don’t like being told what to do…neither do kids.

Helping your child create money memories and positive money habits now will set them up for success later in life, when they need to make money decisions on their own.

Resources:

• The Financial Consumer Agency of Canada: canada.ca/en/financial-consumer-agency/services/teaching-children- money.html

• Talk With Our Kids About Money: talkwithourkidsaboutmoney.com

• Registered Education Savings Plan Info: canada.ca/en/services/benefits/education/education-savings/resp.html

• BC Training & Education Savings Grant Information: gov.bc.ca/gov/content/education-training/k-12/support/scholarships/bc-training-and-education-savings-grant

• Canada Education Savings Grant: canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-education-savings-plans-resps/canada-education-savings-programs-cesp/canada-education-savings-grant-cesg.html

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IslandParent
Vancouver Island's Parenting Resource