A good financial education is important, but not just for adults; it's also important for kids and teens. Teaching your child about money at a young age helps them be better prepared for financial responsibilities in adulthood.
Specifically, teaching kids about money when they are young helps them understand age-appropriate concepts as they grow. For example, a good financial education protects them from financial scams by making them aware of the warning signs to look out for.
In fact, Canadian teens and young adults are at high risk of becoming victims of financial scams: 41% of those between ages 18 and 34 are more likely to be targeted for fraud through social media compared to adult Canadians. What’s more, a recent survey found that for five years, only 1 in 10 Canadians experiencing fraud reported the most serious fraud they experienced.
These statistics show that teaching kids about money is crucial for preparing them for the future. But how do you begin? You can find the answers in this easy-to-follow guide.
Start with Age-Appropriate Money Lessons
Before beginning your child’s financial education, consider their age. Then, begin with age-appropriate financial concepts. Starting at a young age, this could involve teaching your child to recognize different types of currency—like dollars, quarters, and pennies—and helping them understand the value of each.
Once your child masters each lesson, shift to more complex topics like budgeting, maintaining a cheque book, or managing a chequing account. Later, teach older children more complex topics, such as managing and building credit and investing. You also can highlight the benefits of starting to save early for long-term goals, such as retirement, and discuss how delaying might impact those outcomes over time.
An ongoing, age-appropriate approach can not only teach your child about money management but also help them build a strong foundation for their financial future.
Include Financial Education into Daily Activities
Fortunately, daily life is filled with opportunities to reinforce financial education concepts for your child. Take a moment to consider what's possible through these experiences, among others:
- Grocery shopping
- Personal shopping
- Paying household bills
- Managing a household budget
- Saving for a vacation
- Earning money through chores
You don't need formal learning settings to make the most of these moments with your child. Even so, financial curriculums can be helpful in supplementing these experiences.
Use Financial Education Tools and Resources
If you're looking for a structured way to teach your child about finances, there are plenty of financial tools available. These include games, apps, and student accounts that can help them learn about money and make smart choices. Let’s look at some options.
Money Apps and Calculators for Older Children
One of the great things about technology is how it simplifies concepts like saving, spending, and budgeting, allowing us to better understand our money habits. That’s why there are so many budgeting apps out there—banks, financial experts, smart money websites, and others.
Any of these solutions could work well for your teen or university-bound child. However, it's important to first consider your child's specific needs before making a decision. Budget calculators, like those designed for students, can help estimate upcoming costs and provide a clearer picture of how money might be allocated for various needs. For example:
- Tuition
- Transportation
- Housing and other necessities
- Discretionary expenses
- Financial aid and other contributions
- Savings goals
The calculator will guide you and your child through each step, showing them where their money will go and how much they have remaining for additional needs.
Tabletop, DIY, and Interactive Online Money Games
Apps and calculators can be helpful, but they're not the best option for every child. Younger kids, for instance, might need a clearer grasp of financial concepts before they can effectively use these tools.
Learning about money can and should be enjoyable. All children share a love for games—you and your child can play various tabletop and online money games that help reinforce basic money concepts. Examples include:
- Bank It!
- Rich Dad Cashflow for Kids
- Money Bunch
- Farmscapes
- MyFarm
- Making Cents
The key is to choose a game that is suitable for your child's age and that they will enjoy. These games will help reinforce the money concepts you are teaching them.
Money Books for Kids
Financial games are great tools, but traditional books also provide valuable insights for your child's financial education. Similar to games, you can choose money books that are appropriate for your child's age and their level of financial understanding. Some books to consider include:
- “I am Money”
- “Money Skills for Kids”
- “Teaching Kids How to Win with Money”
- “Just a Piggy Bank”
- “Rich Dad Poor Dad for Teens”
- “Money Skills for Modern Teens”
When it comes to games and books, there's no universal approach that works for every child. You know your child best and how they learn. Pay attention to their understanding as you introduce them to various financial concepts.
Student Chequing and Savings Accounts
Bank accounts for kids and teens are great tools for teaching them about saving and managing money. Introducing a savings account can help your child observe how savings accumulate over time, providing an opportunity to discuss basic financial principles like interest.
Next, set up a student chequing account for your child. For younger kids, use a blank cheque register and some printable dummy cheques to teach them how to write and manage transactions. (For older kids, you might consider using real cheques.) This helps your child learn how to track transactions and understand their importance.
Help Your Child Recognize and Avoid Scams
Fraudsters now target our teens and young adults at an alarming rate—nearly 30% of young adults in Canada have fallen victim. It's important to teach your child how to spot and avoid scams for their safety. Here are some simple steps to follow:
- Explain the risks of financial scams.
- Talk about the different types of scams they might encounter.
- Point out the warning signs and what to do if they meet a fraudster.
- Discuss ways to protect themselves and their money.
- Help your child understand how to recognize potential scams and what actions to take if they suspect fraudulent activity.
Conclusion
Taking charge of your child's financial education helps them develop strong money habits for the future, making them smart spenders and savers. Talk to your child about money and make financial education a regular part of family discussions. Be sure to use age-appropriate topics and revisit lessons in various situations to reinforce your child's understanding.
Consider including your children in discussions about family budgeting and planning to help them learn how financial decisions are made. Keep emphasizing the importance of spotting potential financial scams and knowing the best ways to avoid them as well. By doing so, you’ll reinforce concepts with real-life experiences they can use as they become adults.
Over time, talk with your child about their progress on savings or other financial goals and encourage them to stay motivated in working toward these objectives. Encourage them to keep pursuing those goals when you do. While it can be tough to work toward goals, the rewards are worth it when they achieve each one.