Teach your grade-schoolers about finance in 6 easy steps.
When it comes to their financial literacy, the majority of Canadians (94 per cent) give themselves a passing grade, according to a 2014 BMO Financial Group Financial Literacy Study — yet most would rather talk to their children about the facts of life than they would about their financial situation (59 per cent vs. 41 per cent, respectively).
Here are 6 proven (and simple!) ways to introduce your grade-schoolers to basic financial concepts that will prepare them for a lifetime of responsible saving and spending:
- Give kids occasional opportunities to earn money: Build a sense of responsibility and independence by creating a payment system for small chores, like cleaning out a closet or sorting laundry. Consider using a tech tool like ChoreMonster, which lets parents reward kids with things like extra TV time or allowance, to track task progress.
- Encourage them to save: Explain how to set a goal and save for it. Help your child divide funds earned on household chores partially into a spending allowance to buy something fun and partially into savings, storing the money in a piggy bank or money jar. Once a month, count how much has been saved to get your child excited about the money that’s accumulated — and encourage your child to save more. Help track what’s been saved with a kid-friendly free finance app like bankaroo.
- Open a joint account at a bank: Kids will feel a sense of pride knowing they have their own savings account, which can help your child develop good financial habits that’ll continue into adulthood — including saving regularly and not spending everything. For tips on helping your child open an account, check out the Canadian Securities Administrators’ MakeItCount financial institution activity guide.
- Give them the freedom to spend what they earn: Letting kids make their own choices (and mistakes) can be a valuable money lesson. For example, if your child spends his entire allowance the first day he gets it, and has no spending money left for the weekend, he’ll quickly learn to ration what he earns. An allowance tracking tool that lets you enter assigned values for each task, like the free A+ Allowance app, can help show your child what’s been earned each day.
- Help your child create a budget: As a family, sketch out a weekly or monthly spending budget for your child, based on entertainment expenses like going to the movies, buying new clothing and other purchases. Then estimate how much of your child’s allowance and other earnings can be put toward each item — which will help your child learn to distinguish between wants and needs. To get started, print out sample expense and budget worksheets from Practical Money Skills Canada.
- Illustrate the importance of giving back: Let your kids pick relatable charities and brainstorm ways to fundraise, such as sponsoring a lemonade stand and donating the proceeds to a cause. Encourage your children to also set aside a portion of their savings for charitable donations — a great lesson to instill at a young age and continue to practice as they grow. Find out more about Canadian charities and donate online through CanadaHelps®*.
Related: 5 ways to help your preschooler learn about money
Looking for more resources? Wednesday, April 20, 2016 is BMO’s Talk With Our Kids About Money Day in partnership with CFEE. To celebrate, we’re sharing fun, easy, and engaging activities at www.talkwithourkidsaboutmoney.com
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