There are 4 key words that will help you teach your child how to manage their own money –SPENDING, SAVING, SHARING and SCHOOLING. Along with learning why each of these words is so important, we’ll also give you some tips on implementing these financial teachings into your everyday life.
To be able to make choices and learn about money, a kid has got to be able to spend it. Children learn many life lessons by being able to handle money and make decisions about what they want to purchase. Younger children will most likely find enjoyment in buying little things like stickers, cards, craft supplies and treats. Older children can use their spending money to purchase their own books, movie tickets, CD’s and food or snack purchases when with friends or on family outings. The key is that by ensuring that your child has a little pocket money you are setting them up to make some of their own decisions on what they would like to buy and they will be learning lessons on handling, counting and making change at the same time.
Children can learn much from delayed gratification by having to save up to make more expensive purchases. When the money to purchase a bike, sports equipment, clothing or special toy comes from their pocket instead of yours there is much more pride of ownership in the item being purchased and chances are they will take better care of something they’ve saved up to buy. Older children will benefit from saving up for more expensive purchases like a cell-phone, iPod, laptop or car. Starting a bank account early on will aid in the saving process and also give you the opportunity to teach your child about interest and how to set goals for saving. As your child approaches the teen years financial planners can assist you in helping them budget their money and come up with a plan for reaching their goals.
When teaching children about money, don’t overlook the lesson of what it can do to help others. Whether you teach them to donate a portion of their savings to your church, local charities or for fundraising causes on a global scale, there are many ways sharing and giving back can be incorporated into teaching children financial responsibility. It is important to find out what your child is interested in and how they want to use money to help others. Taking a trip to the grocery store and giving your child the opportunity to pick out and purchase items to drop off at the food bank will teach them how money can be used to help others in the community. If they have a love for animals, they can find out what your local humane society needs and make purchases that will help the animals waiting for adoption. Older children or collectively as a family you can find organizations online where there is a need and get involved in helping out. Some great websites to have a look at are:
www.freethechildren.com – children helping children through education
www.plancanada.ca - Plan Canada – gifts of hope catalogue or child sponsorship
www.wwf.ca - World Wildlife Foundation – symbolic animal adoption program
You couldn’t spell RESPonsibility without the letters RESP and if you don’t yet have one for your child, it’s not too late to start one to begin investing in your child’s future education. It is wise to involve children in the process of saving for their education by having them help with monetary contributions to reinforce to them the value of their education. By starting early and saving a little money on a regular basis, children will build a solid foundation and have the finances needed to start them on the path to post secondary education and their career goals. If a Registered Education Savings Plan (RESP) has already been established for them, it would be wise to have them help with contributions to their plan with savings from their allowance, monetary gifts or part-time jobs. You can find out more information about RESP’s and how the government of Canada will contribute to your child’s education through the Canadian Education Savings Grant at www.canlearn.ca
For additional tips and products to help raise financially responsible children please visit www.fourpiggies.com