Tips to Consider When Talking to Your Kids About Finances

The summer months can be a great time to teach children about financial literacy. From budgeting for a trip to the grocery store, to keeping track of expenses or saving for a special purchase, instilling early savings habits and money management practices can have a positive impact on kids’ financial future.

For some parents, offering too much information or not enough is where it can get tricky. So, how do you find the right balance?

Here are a few tips to consider when talking to your kids about finances…

·         Find age-appropriate ways to talk about money – It’s important to make money lessons relevant for your child’s age so they know what they should be saving for. For young children, it could mean saving for a special toy or a bike, and for teenagers and young adults, it could be investing in post-secondary education or planning to move out of the house on their own.

·         Explain that saving and investing can help achieve their goals – Educating your children on savings and investing products can help them understand why they should be putting money away, and how to make it grow faster. If they’re entering college or university, consider teaching them about interest and the basics of generating returns on investments.

·         Talk about savings as an investment for their future – Teaching your children to ‘pay themselves first’ can help introduce the value of saving for a long-term goal. For most children, a savings account is the first step. When they start to generate a steady stream of income, it might be time for them to consider using a service that automatically puts money aside.

Make it real

Learning a thing or two about the value of budgeting, saving and investing can help children realize that it’s not always easy – and that it takes some planning and practice to reach their financial goals. It’s important to start the conversation early and continue having it over time. The lessons may work best if they are set in real-life situations, instead of just a single sit-down talk.