How and when should I teach my kids about money?
Teaching our kids to have a strong financial understanding is important, but how you teach them can make all the difference in how they apply it later on in life.
ING Direct conducted a survey asking kids aged 11-14 to grade their parent's teaching skills, when it comes to finances and what they wished their parents would teach them about money. Most children gave their parents a passing B for the skills. It's not terrible, but also not something to write home about. This is what the children wanted their parents to teach them:
How banks/credit cards work (38%)
What things cost and why (36%)
How to save (27%)
How to manage money (26%)
It seems like kids have the right idea - and the best way to teach them about this falls on three principles:
Model the right behaviour - 47% of Canadian parents say that they maintain an emergency fund - how are you going to teach your children to start saving? Practice what you preach!
Increase communication quality and frequency: Teaching about money should become a part of daily conversation, it's the only way to ensure your kids begin to think about and apply best practices on a daily basis. Teach them a variety of skills, not just the classic "piggy bank" lessons. Show them budgeting, investing, bill payments, concepts of borrowing and credit etc...
Give opportunities for practice: Your kids should have an opportunity to practice every lesson they learn from you. If you teach them about mortgages, have them help you review statements and highlight key information. If you want them to learn about credit cards, start up your own family credit system so they can learn the dangers of compounding interest.
Kids are never too young to learn and are more capable of absorbing and applying these lessons than you might believe. This topic is so important, financial literacy is one of the best gifts you could give your kids. Leading by example is another great way for you to improve your own financial behaviour. When your children hold you accountable, you will be more likely to follow through with your promises, stick to your budget and work harder to stay on track toward your financial and life goals.
To improve your own financial literacy, so you could pass your knowledge to your children, check out our Financial 101 Life Event.
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