It’s Time to Talk. Let’s Teach Our Kids About Financial LiteracyMar 31, 2015
When it comes to discussing personal finances and financial difficulties, most individuals feel that it is a sensitive topic. As a result, many try to avoid the topic whenever possible. According to a new poll from BDO Canada Limited and Ipsos Reid, only half (49 per cent) of Canadians are always truthful about their financial situation, while 45 per cent admit to telling “white lies”. Some may find this poll’s findings surprising, I did not. Growing up, I was taught to not talk about personal finances; to do so was in bad taste. And to ask someone else about their financial position was definitely a faux pas. For those Canadians taught similar lessons when they were growing up, it can be very difficult as an adult to talk openly about their own financial situation – for better or for worse. Is it time to start teaching our children about financial literacy and to start talking to them, at an age appropriate level, about our specific financial situation?
Before we start to talk honestly to our children about financial literacy and money management, it may be beneficial to determine why we may or may not be truthful when we discuss our own finances. According to our poll, 45 per cent of those we surveyed admit to telling “white lies” about their financial responsibilities. Furthermore, the number one reason people are telling these “white lies” is out of a desire to protect their loved ones from stress or worry. Children of all ages learn by example from someone they look up to. Opening up to your children about your financial situation gives you the opportunity to teach them about money and also sets an example of open communication about the topic.
Of those who admitted to bending the truth about their finances, forty-four percent indicated that they would be more open if they did not feel judged, ashamed or uncomfortable. Parents in particular may feel embarrassed that they cannot give their children and family the same things they see their friends getting. However, this is also an educational opportunity. It could be an opportunity to talk to your children about your current financial situation or perhaps the lessons you have learned and wish to pass on.
When I meet with couples or individuals regarding options for dealing with their debt, one of the most common statements I hear is that these individuals wish they were taught about finances when they were growing up, either by their parents, another role model, or in school.
When it comes to teaching your children about the value of money, and financial responsibility, there are many approaches that a parent can take. Here are a few:
Educate at an early age
Financial literacy can start at an early age, it is never too early to teach and show your children the value of money.
Open a bank account
Money management with your children can start with opening a bank account. This will allow you to demonstrate saving and interest and let them watch their bank account grow.
Make bank deposits in front of them
Bring your children to the bank, make a deposit in front to them, and explain what you are saving for (examples: emergency fund, vacation, college tuition). Your attitude about money will influence your children when they are faced with using credit cards, managing debt and paying bills.
Get your children involved in the household expenses
Bringing your children to the grocery store (even though you may shop faster without them), and explain that your budget is for certain grocery items. Have them compare prices and hand the money over to the cashier. This will help them understand that they cannot leave the grocery store without paying, and ensure that there is enough money to pay for all the groceries.
There are more exciting ways to introduce financial literacy to your children. Try playing games that involve the use of money or look for comic books that discuss finances. You can visit the websites, Practical Money Skills Canada and Talk with our Kids about Money, which both have many financial literacy resources for children and adults.
Communicating with and setting examples for your children will go a long way in teaching them about money, budgeting and debt management; tools that will serve them well as they grow and mature into independent adults who will be responsible for their own financial decisions.