Money is a part of our everyday lives, yet there’s still a ton of stigma around it. Some think it’s rude or impolite to talk about finances. But with Canadian household debt hitting a record high of $1.92 billion last year… Perhaps not discussing finances has been partly responsible for getting us into this mess in the first place?
Maybe we should be talking about money more frequently? And with those who need it most: kids.
Before you know it, your kids will be leaving your nest and entering the world of newfound freedom, temptations and questionable life choices (AKA: adulthood). This, combined with disposable income from a part-time job can put them in a precarious situation. Young adults not equipped with the knowledge or experience to handle money responsibly could plummet into debt quicker than you can say “Just put it on credit!”
So how about giving them a head start before they’re faced with the decision of paying for groceries and rent for the month… or getting the latest iPhone?
Here are 7 easy ways to teach kids financial literacy:
1. USE ACTUAL CASH
With most of us swiping plastic cards for everything we buy, it can be difficult for children to get a sense of how money actually works. Use actual cash and get your kids to interact with cashiers at the checkout by counting out money and working out the change.
2. CHALLENGE THEM
Wherever you go, there’s an opportunity to teach kids financial literacy. The grocery store is a great example. Depending on age, get your kids to tally up the cost of groceries as you’re adding them to your cart, or compare prices on like items and tell you which is the better deal. Parking meters are great teachers too, ask them to work out how much 90 minutes of parking will cost.
3. SAVE, GIVE, SPEND
Show your kids how to use money wisely with the mason jar method. Label three mason jars with Save, Give, Spend. Then whenever they receive allowances or birthday money, they learn to divide their money into three parts. Instead of spending the whole lot as quickly as they get it, this method helps them experience the joy of giving to others and practice saving for long-term goals.
4. OPEN A SAVINGS ACCOUNT
Make a special trip to the bank with your kids to open a savings account in their name. Whenever their “Save” jar gets full, you can make a trip to deposit it into their account. Give them a visual understanding of what’s happening behind the scenes. You can then log in online with them and show them how their money is growing.
5. PLAY GAMES – ONLINE OR OFFLINE
There’s no end to tablet and smartphone games that teach kids financial literacy. And there are plenty offline too. How about good old Monopoly or playing shop?
6. LEAD BY EXAMPLE
Your kids are curious and they learn from you. When they ask questions about money, take the time to answer them using examples. Show them how you save or donate money. When they’re older, show your credit card statement; explain the concept of interest, and what you need to do to get the number to $0. Explain what you’re doing to their grandparents too, so they can be mindful when money comes up in conversation.
Create a healthy relationship with money by talking to your kids regularly about it. Setting good money habits early on gives them a powerful advantage in controlling their own financial destiny later on.
How do you teach your kids financial literacy?