Raising Smart Money Kids

It's never too late or too early to introduce children to positive spending, saving, and borrowing habits which can help ensure a lifetime of financial confidence.

Whether it's teaching them the value of a dollar or helping their future financial independence, many parents strive to teach their children how to make sound financial decisions.

And it's never too late or too early to introduce positive spending, saving and borrow­ing habits that can help ensure a lifetime of financial confidence.

GET STARTED EARLY

Your involvement is key to starting your child on the right path to financial literacy. As early as age six, children can understand the basic principles of saving and spending, including the value of saving first, or even saving for longer-term goals. Many experts recommend a "save-spend-share" concept.

This means that when­ever children receive money, they put some aside for savings and charitable donations, and can spend the rest as they like.

Opening a high-interest savings account can also help introduce bigger kids tn-budgeting, investing and borrowing. Childhood is also an ide­al time to instill a lifetime desire to give back. Consider talking to your children about causes they might like to support and incorpo­rating their ideas into how your family gives back.

PREPARING YOUNG ADULTS TO LEAVE THE NEST

Whether they're planning for university, moving out, or starting a new career, money plays an important role as your children start the journey of "making it on their own."

Budgeting: Post-high school is a great opportunity to create a first "real" budget with your child. Encourage them to track spend­ing, and list income sources and projected expenses. Adding these numbers up can help determine whether they'll run short or have a surplus. If they're running short, they might want to look hard at "wants versus needs" or ways of increasing their income. If they have a surplus, introduce the idea of contributing to a Tax-Free Savings Account or Registered Retirement Savings Plan.

Credit: Young adults are often presented with easy access to credit. Teach them to be aware of anything that sounds too good to be true, stick to their budget and borrow only what they can afford to repay.

GROWN-UP CHILDREN STILL HAVE PLENTY TO LEARN

Adult children eventually enter a world where they need to bal­ance their financial goals, such as owning a home, with basic liv­ing expenses or the costs of raising children.

This is an ideal time to pass on your own financial experiences, including the challeng­es you overcame to build wealth. Preparing children to receive their inheritance is another key element of financial education, and helps perpetuate your family legacy.

Consider talking to them about what they will inherit and how they can manage their in­heritance, or passing on assets while you are alive to allow them to benefit from your guidance.

THE VALUE OF ADVICE

While informal family conversations and real-world learning are essential components of financial education, it can make sense to introduce your children to your financial, legal and tax advisors, who can help provide guidance that might be difficult for you to convey.

The important message here is to start having these conversation as early as possible and to keep in mind that there are tons of resources out there including local profession­al accounting bodies, such as CPA New Brunswick, that can offer all sorts of financial literacy information, advice and tools for individuals of all ages!

Mathieu's column, Your Financial Corner, will appear in each edition of Chamber Vision magazine, published by The Chamber of Commerce for Greater Moncton.

About the Author

Mathieu LeBlanc, CPA, CA, CIM

Associate Portfolio Manager, The Cormier Group of RBC Dominion Securities
Mathieu LeBlanc is a Chartered Professional Accountant and Associate Portfolio Manager with The Cormier Group of RBC Dominion Securities.