November is Financial Literacy Month and it’s a great time to share what you know about money matters with your kids. To mark Financial Literacy Month last November, TD commissioned a report – State of Financial Education in Canada – which found parents and educators share the main responsibility for the financial education of children.
Developing healthy habits starts at a much earlier age than 16 years old. Taking an active role in your child’s financial education at an early age will instill a positive attitude towards saving and spending down the road.
And who better than you, their parents, to start the money management conversation to help your children develop smart money skills that can set them up for a more secure financial future.
As children grow so do their understanding of money concepts. Starting the money management conversation with them early is only the beginning. You can continue and tailor the conversation as they age.
Paul Orlander, Senior Vice President of Personal Savings and Investing at TD Canada Trust, and co-chair of TD’s Financial Education Council, offers these guidelines to help parents tailor money lessons to each child’s age and developmental stage. For additional money management resources, you can check out TD’s Smart Money Toolkit.
Under 6 years old
At this stage, children are interested in the different shapes and colours of money. Handling real money can help them learn more about it. So, give your child some shiny coins they can put in a jar or piggy bank to watch their savings grow.
Although preschoolers may be too young to understand the concept of money, they are learning to count, and have a basic knowledge of quantities. Make the experience of adding to the jar a big deal and as the number of coins grows, swap them occasionally for the equivalent amount in crisp bills.
6 to 9 years old
Kids at this age understand the concept of saving, but they might not yet understand what’s fully involved in paying for all the latest and greatest toys they want. The balance of saving and spending can be reinforced by giving your children a small allowance, perhaps earned through set chores, explaining to them how long it will take to buy something they really want.
Children at this age have usually grasped basic math skills like addition and subtraction, which can help them learn the value of money.
10 to 15 years old
Teach pre-teens how to use their bank account, such as making deposits and withdrawals, and responsibly use a debit card. They might start to earn their own money through odd jobs or babysitting, so now might be time to ask them to cover some of their own expenses.
Teens are often developing their plans for the future – looking ahead to college, university or a big trip – so it’s a perfect time to introduce them to the concept of setting financial goals and investing early to take advantage of compound interest.
It is also important to teach teens about the importance of credit and how a credit card works.
16 to 18 years old
Your child may be less financially dependent on you now, especially as they start earning more money through a part-time or summer job. They also may be taking on more responsibility to pay for regular bills, such as monthly mobile payments, and saving for bigger purchases, such as a car. Sharing the family budget will help your teen learn about real-world costs and keep their expectations in line with your family’s financial reality.
Furthermore, sit down with your child and help them set up their own budget tracker, so they too can track where their money is going and how to set spending priorities. Saving for retirement early and for a rainy day are other topics of discussion to consider having at this age.
To help you start and continue the conversation, TD has launched a new family resource hub that offers tools and resources to help you educate your children on smart money management practices. Resources from the Smart Money Toolkit include learning modules by age, a parent quiz and an activity book for kids.
There’s no better time than Financial Literacy Month this month to get the conversation started with you kids.
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