Help children build a solid financial foundation

Money smarts begin at home, so talk openly, be a good role model

Did you know that November was financial literacy month in Canada?

Two years ago, the government proclaimed November Financial Literacy Month.

The intention is to raise awareness of the importance of acting knowledgeably and with confidence when managing personal financial affairs.

HOW DO YOU L EAR N ABOUT MONEY?

How do most people learn about financial literacy? For most of us, dealing properly with money does not come naturally. It’s not like we are born with this natural ability; there is no such thing as the money gene.

There is a significant lack of formal financial education programs. It’s not something we learn in school and it’s not something that is prevalent in the workplace. As a result, most financial education is informal. It comes from the school of hard knocks. It’s all about trial and error. Sometimes you have successes and sometimes you make mistakes and hopefully the mistakes are not too damaging.

Although I am a big fan of financial literacy, I don’t believe it’s the only key to success. After all, don’t we all know that we are supposed to save money regularly, spend less than we earn, protect ourselves from financial disaster and stay financially organized? Is financial literacy really the problem?

TARG ETING THE YOUTH

Engaging youth early in financial literacy is one of the key objectives of Financial Literacy Month. In fact, the Financial Consumer Agency of Canada (FCAC) ran a contest for the youth challenging 13- to 19-year-olds to submit videos on managing money to achieve a financial goal. In preparation for this article, I sat down and watched a number of these videos and was really impressed with the submissions.

BEGIN AT HOME

As important as contests like this are, financial education really needs to begin at home. Here are a few tips and strategies to set the right foundation for your kids’ financial future.

Encourage them to read financial books and websites. Talk to them about the importance of financial education. Consider a Christmas gift that encourages financial literacy.

Sometimes it’s tough for young people starting out, because most of the financial industry prefers clients with lots of money. If you have a good financial adviser, talk to them about helping your kids. Chances are they will be more than willing to help to support you.

Talk openly about money. Often money is one of those taboo family topics. But if you want your kids to learn more about money, it starts by opening up those lines of communication. Talk about both your successes and failures. Just as with all of those other potentially uncomfortable life lessons, it’s better to deal with them head on than to completely ignore them.

Set a good example. Parents are role models for many aspects of life. Kids will quickly learn the behaviours of spending and saving from what they see day to day.

If you want your kids to develop sound financial values and habits, take control of your own personal finances and set a path for improvement. Whether it’s paying down debt, saving more money, getting organized, visiting your financial adviser or reviewing your investments, doing something is better than doing nothing.

As you embark on this journey toward financial betterment, involve your kids. It might make you more accountable and at the same time teach your kids a valuable lesson.

It’s much more effective to teach financial literacy when you practise it yourself.