Teaching kids about money
On top of having to manage your finances, the need for teaching children about money can be another challenging task. According to a 2017 TD survey, more than nine in 10 Canadian parents (94 per cent) said they're the biggest influence on the development of their children's money skills – having to teach their kids the value of money, how to save, and how to have good spending habits - but nearly one-third (31 per cent) said they find it hard to broach the subject.
So, to help parents talk to their kids about money, we have some tips for discussing family finances with your children.
Talk openly and honestly about money
It's not always easy to say no when your kids ask for things, whether it's a new video game or a paid app for their phone.
When these requests come up, keep in mind the following:
- "You shouldn't be afraid to be open and honest with your kids when it comes to money," said Kathy Morin, a senior financial advisor for TD in Hamilton, Ontario. "There's no need to be overly serious, just let them know that, as a family, you need to spend responsibly."
- "Kids are very intuitive and they know when something is wrong," said Pamela Byron, a senior TD financial advisor in Simcoe, Ontario. You can talk truthfully to your kids without going into great detail and let them know why your spending habits are what they are.
Talk about needs versus wants
It can also be helpful to talk to your kids about the difference between spending "needs" (the must-haves for survival, like a place to live and food to eat) and spending "wants" (the nice-to-haves, like going out to eat, cool new sneakers and pricey toys). You can explain why you must prioritize paying for the family's spending needs first.
If you’re experiencing financial hardship
For families with children at home, income disruption can have additional consequences. In many cases, parents have to change their spending habits or cut back on certain purchases for things around the home, while explaining to their children why those changes are happening
Your kids may ask uncomfortable questions, like “Can we afford to keep our house?" or “When are you going back to work?"
When answering your kids’ questions, remember that:
- Your kids may be looking for reassurance that everything is going to be alright, and even though no one knows for certain what the future holds, try to answer their questions as honestly and sensitively as you can.
- It's okay to not have all the answers. You can also get back to them later with answers which will help keep the conversation going.
Keep the conversation age appropriate
You can also have different kinds of financial conversations depending on how old your kids are.
- "Younger kids may only need to understand that your financial situation has changed and there isn't as much money now," Byron said. "But a high school level kid might be able to understand what debt is and that your cash resources are limited."
Just remember that kids are curious and resourceful. It's our responsibility as parents to listen and provide honest answers to their questions. By doing so, we can ensure that we start and maintain a healthy dialogue on managing money. "Just remember that kids are resilient," said Byron. "It's our responsibility as parents to help them understand that we're doing our best to keep them safe and healthy."
This content discusses current topics of interest in a general and informational manner only and may not be appropriate in all circumstances. Please ensure that you seek advice personalized for your situation from the appropriate professional, consultant or subject matter expert on the topic of interest to you.
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