Financial Education For Children

Much like teaching children how to ride a bike, financial education for children takes time and instruction.

You certainly don’t buy a bike, give it to your child and say “there you are, go ride”.  You help them to understand the rules, show them how to sit and hold on, how to peddle, to be aware of traffic, to wear a helmet, and so on. You start with training wheels, run beside them when the training wheels come off, and eventually watch them from the drive way as they go to the end of the street and back on their own. As they mature and head out with less supervision, you still make sure they are wearing a helmet, you ask where they are going, who they are going with, and when they will be back. They are usually responsible young adults before you ask fewer questions, but certainly you check in regularly.

Financial education for children is very similar. Falling can’t be completely avoided, and giving them the room to make their own mistakes is part of how they will learn. But giving them an allowance and sending them to the mall doesn’t actually teach them anything. If they are left to their own devices, they can become easy prey for the consumer wolves. 

There are simple strategies for every age group, and it is never too late to start.

AGES 4 - 8

For younger children, ages 4 – 8, talk with them about where money comes from, how it is earned, and how you spend it. Start them with a piggy bank for the small amounts of cash they collect and then open a bank account for regular deposits from their piggy banks. Make sure they can view the account balance regularly so they can check the balance and watch it grow. Talk with them about the difference between wants and needs. Have them set a goal for a purchase, including strategies to help them accomplish their goal.

AGES 9 - 12

For children ages 9 – 12, you can involve them in grocery shopping by having them help find weekly discounts, deals, and sales. Bring them to the grocery store and explain why you are choosing one product over another. Each child’s motivation will be different, so spend time and discover what motivates your child and use that motivation to set new goals and strategies to achieve them. Watching a bank account grow can be a very powerful motivator and the more pride they have in their savings, the less likely they will be to spend it.

AGES 13-15

Establishing priorities can be difficult for teenagers ages 13 - 15 as motivations may be largely influenced by advertisers and peers.  Reinforce the difference between wants and needs and involve them in funding the difference.  For example, although clothing is defined as a need, designer clothing is not.  Having your teenager fund the difference between a piece of clothing and a designer label will help them appreciate the cost.  Discussing the cost of various goods or services and the effort required to earn the funds will assist them in determining if a purchase is worth the effort they have to put into obtaining it.

AGES 16-19

For young adults ages 16 – 19, obtaining employment means they now have access to a regular income of their own, but that is no reason to stop being involved in their financial decision making process.  Having regular conversations about their budget, their savings, and their goals gives them the opportunity to ask questions and learn from your experiences.

The sooner we start to include our children in financial discussions and activities, the sooner they will have an understanding of how the consumer system works. Being involved, talking with our children - not to them, and providing guidance will go a long way to building a solid foundation for what is in store as they reach adulthood.

Start your journey to financial freedom. Book your free, no obligation consultation today to connect with one of our experienced BC/Yukon Licensed Insolvency Trustees.