Canada’s Finance minister Jim Flaherty has stated a central goal of strengthening the financial literacy (defined as knowledge, skills and confidence to make responsible financial decisions) of Canadians. “Our economy is built on millions of everyday financial decisions by Canadians,” said Minister Flaherty. “Recent events have shown us that there are major risks and that financial literacy is an important life skill. Whether it is a question of saving for retirement, financing a new home or balancing the family chequebook, improving the financial literacy of Canadians will add to the stability of our financial system and make our economy stronger.”
Last summer a taskforce was launched to measure the level of financial literacy as well as propose and execute different strategies. Over the spring the task force engaged in public consultation sessions across the country. The public proposed strategies including increasing awareness of financial issues in the schools, however some experts argue that money management skills need to be developed as early as possible and need to be strengthened in the home. But how do parents accomplish this? What tools do parents have to teach kids the right lessons? A recent article in Today’s Parent magazine stated that many parents felt they were better equipped to talk to their kids about drugs and alcohol than money.
Here’s a summary of some tools tips and strategies gathered from a number of sources;
What experiences have you had teaching your children about money? We would love to hear about your challenges, successes and different strategies.
I’d love to put my two cents in on this issue, as I see so many people living above their means and not curbing their bad spending habits…a young woman I work with was complaining a couple of years ago about the fact that she has $10,000 owing on her VISA…I asked her what she’d bought, and she didn’t really know. She’s no better off today. When we won the lottery at work, we each received over $20,000. There were twelve of us in on it, and a couple of people just blew it…
My advice –
Teach by example. When times were tough I didn’t spend money on anything I didn’t need – big or small.
Stress the fact that they can only spend their money once, so spend it wisely. One of my kids decided, after paying for a cell phone while working part time that it just wasn’t worth his hard earned cash. The other three think it is worth it.
Don’t buy on credit – if they use their credit cards, they pay them off monthly. I’ve told them the only things they should ever be in debt for would be a home or car.
If they have to save for something, by the time they have the money, they may not want it. But then they have the means to buy something else.
Buy quality – when buying anything.
Make them have a financial investment when it seems appropriate – although we paid for school, they bought their own books.
Once they start working (part time), let them start buying some of their own clothes.
Don’t buy them gifts impulsively, so they don’t expect them. Children (and adults) develop a sense of entitlement. I would rarely buy them a gift unless it was Christmas or birthdays – then I would really spoil them.
When my children were young, when we were going grocery shopping I would give them a loonie to buy gum or a chocolate bar. My oldest would save his loonie, but would buy a piece of gum from one of his siblings. He’s always been frugal (and smart), but when he bought his first car, he paid cash.
My kids think I’m cheap (and I wouldn’t disagree), but they respect that fact that we live in a nice home, paid off the mortgage in 12 ½ years, and can see the finish line in paying for their university/college tuitions. Although they can and do waste their money sometimes, I think the seeds are sown.
When I read this over, I see it may be directed more to parents than children…
Sharon Dell’Angelo
Thanks for the reply Sharon, have a look at this walletpop.com article,
http://www.walletpop.com/blog/2010/08/12/money-talk-night-teach-your-kids-financial-responsibility-on-se/
It discusses financial literacy from both the parents and childrens perspective. Also check out http://www.moneytalknight.com for more information about educating children.