A Financial Foundation for Your Kids

What to teach your kids about money, and when to do it

Financial FoundationCan you imagine blowing through $90,000 in less than three years?

Yes, it may seem extreme! But this is exactly what happened to one U.S. college student who is receiving extensive media coverage for her poor money management skills and crass sense of entitlement.

According to the article posted by People Magazine, the 22 year old student threw her $90K college fund away on shopping sprees and European vacations – and now blames her parents for not teaching her how to budget.

While this is a glorified example of the value of budgeting and money management skills, it is important to recognize that the sense of entitlement demonstrated by this Atlanta-based student is not reflective of all students.

That being said, Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, believes that the story is an excellent cautionary tale that demonstrates the importance of good money management skills – at any age.

“For the most part I believe students understand the need to live on a shoestring budget while completing their education, says Schwartz.  “Relying on mom and dad to bail you out of poor financial decisions is simply a bad strategy that will do more harm than good in the long run.”

While Schwartz feels it is essential for college and university students to understand the basic principles of money management and budgeting, he strongly recommends that parents begin teaching their kids about money from a young age.

“Budgeting is a lifelong skill,” adds Schwartz.  “Sending our kids out into the world without a solid understanding of money is the equivalent to sending them to a gunfight with a knife.” 

Schwartz and the team at Consolidated Credit have worked with countless young Canadians who have found themselves in financial trouble, simply because they didn’t know how to budget.  Here are their tips to help parents talk money with their kids at every age: 

3 – 5 Years Old – Up to this age, children are typically used to getting whatever they want.  From hugs to naps to snacks, young kids are accustomed to having their wants and needs met.  At this age, when it comes to “wanting” something new, it’s difficult to hear the word “NO!”  However, the ability to learn about delayed gratification is an essential financial skill. This is also a great age for kids to begin identifying money and understanding the differences between cash denominations.

6-10 Years Old – By this age, it is important to let kids make some financial decisions for themselves.  Teaching children that money is finite is an important step in their financial education, and one you may wish to teach with a weekly allowance,   However, at this age it is important to recognize that an allowance is more of a  training tool than something to be earned by doing chores. By letting your kids chose how they spend their allowance, they will quickly learn that once they have spent it, there is no more money to spend until they ‘receive’ more. By giving them the freedom to make these decisions, you are helping them learn to make wise choices with their money.

11-13 Years Old – By age 11, kids should have some understanding of what it means to save.  Teaching the value of compound interest (earning interest on savings as well as past interest) at this age will stick with kids for their lifetime.  Take the time to teach your child that short-term sacrificing can help achieve long-term goals; it’s a lifelong lesson that will serve them well in their financial future.  Explain to them that they could easily save up for something bigger if they skipped the daily corner store snacks.

14-18 Years Old – As kids enter the end of their high school days, it’s important they know they have to earn more than grades to go to university.  Have them research the actual cost of tuition at the schools of their choosing, along with other costs like housing, books and meal plans.  They may be more encouraged to budget and save if they know the real cost of an education.

18 and Older – As you send your kids away to school, it is essential that they fully understand the cost of credit and the importance of budgeting.  There is a good chance your child will get their first credit card around this age.  Teaching the principle of only using credit if you can pay the balance in full each month is a great way to relieve them of the burden of paying off credit card debt at the same time they are paying off student loans.


If poor money management skills have left you in financial turmoil, we can help!  Call 1-888-294-3130 today to speak to a trained credit counsellor and find out how you can get your budget under control.  You can also try our Free Debt Analysis online and a counsellor will reach out to you.



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