Youth & Money
Use Real Life To Teach Your Kids
There are many opportunities as you go about your day-to-day life to teach your kids about money. For example, you can have your kids help you:
- Calculate the tip in a restaurant. If they are too young for that, let them count
the tip or leave it on the table.
- Double check the money you take out of the cash machine by counting it. Ask them
to remind you to enter it in your chequebook register when you get home.
- Keep track of what it costs to feed and care for the family pets, or create a
budget for a new pet they want.
- Plan a special evening meal within a fixed budget. With your children, plan the
menu and shop for the food.
- Clip coupons. One mother lets her child clip coupons and for every one she uses,
he gets to keep half the savings!
- Tell them you'll only buy their favorite treats when they are on sale, or if you
have a coupon. Show them how to use the sales flyers from the newspapers to hunt
for bargains.
- Research prices for something they want by hunting for it on the Internet, or
noting prices in a couple of stores.
- Compare prices among the different grades of gasoline at the gasoline pump.
- Make a list before you go shopping, and help you stick to it!
When they are old enough, have your child help you balance your chequebook or enter your cheques in your chequebook register when you pay the bills (make sure to double check the math!)
Teach Them About Compounding: Often called the "Eighth Wonder of the World," compounding can work for or against you. If you save your money in an account that earns interest, compounding works for you by allowing you to earn interest upon interest. If you are paying interest to credit card companies and other lenders, however, it works against you.
Encourage your kids to save, and consider paying interest on their savings until they are old enough to open an interest-bearing account at a local bank or credit union.
As your children get a little older (usually around age 7-9) they may be ready to learn about the stock market and investing. A fun way to get them started is to help them buy their first share of stock in a company whose products they buy. (Visit www.GiveaShare.com) You can also visit websites that teach investing for kids through games and simulations (see the Resources section). Finally, you may want to get your child started investing in the stock market, either by buying stocks or mutual funds. At Sharebuilder.com, for example, they can invest in an education, retirement, or regular investment account for just $12 a month.
Teach Them About Credit
If your kids do want to borrow from you, teach them how lending works in the real world! Charge an interest rate and draw up an agreement. You can make up payment coupons or use another system to keep track of their payments. Be consistent with it and don't let them borrow again until they've paid off the first loan! Also be careful about letting them borrow too frequently, or too far in the future. It's better to try to get them to save instead.
Avoid borrowing from your children, including from their savings or the gifts of money they receive from others. If you have trouble managing your own expenses, talk with a non-profit credit counselling agency.
It's also a good idea for you to explain to your children how credit and debit cards work. Obviously, very young children will have trouble grasping this concept. They may think that all you need to do to get money is to go to the cash machine! But as they get older you can explain to them how you deposit your pay and get money out when you need it. Around age nine or ten, most kids are ready to open a bank account and use it.
Don't forget to warn your kids about credit card safety and ways to protect themselves from credit card fraud. Avoid giving them your passwords or personal identification numbers to your debit or cash cards unless absolutely necessary.
Encourage Financial Education
Schools are beginning to adopt financial education programs. Talk with your child's teachers, school administrators or parent teacher organization about making sure financial education is part of the curriculum.
Have Fun!
Here are just a few resources for teaching your kids about money. Ideally, you'll want to check out these websites with your children. You both might learn something!
At the website www.funbrain.com, you will find a “math arcade”, a “changemaker” and many other fun activities that will challenge your child to tap into their mathematical ability.
http://mathcentral.uregina.ca is the Math Central website. This site is geared toward older kids and teachers.
