Financial Lessons for Children

By Anastasia Tsouroupakis


Way back in February I had read an article in the Huffington Post Canada which reported Canadians had the second highest debt increase in the world; according to Mckinsey Global Institute, Canada had the “second highest increase in household debt, relative to income, among developed countries since the Great Recession”.  I found this stat alarming! My first question was why?  I remember growing up the rule in our household was if you couldn’t pay for it in cash you couldn’t afford it.  I am sure that most of my contemporaries grew up with the same philosophy and yet, as a nation we are still in trouble.  How do we raise our kids to be fiscally responsible?   We did what any other parent would do; Googled it!   There are a wide variety of articles that touch on this subject, and after going through most of them I decided upon three that made the most sense to us and which my kids could get on board with.  I would like to say that  up until this point we didn’t think that we had done such a bad job, our kids (ages 9,13 and 16) do work around the house and the office and we give them an allowance which they spend however they chose.  We had set some ground rules early on, for instance any kind of leisure device gaming stations etc., along with any games, controllers etc., toys, etc, they buy with their own monies.  This of course is not an unusual strategy in fact most of our friends do this, however this is not enough we have to teach them to be more fiscally savvy; their economic survival depends upon it.

  • TEACH YOUR KIDS ABOUT HIDDEN COSTS: The first article we found spoke about teaching your kids about hidden costs. In Canada this lesson is be easily taught using our GST; the Goods and Service Tax of 13%.   Up until this point we would pitch in the tax, but we quickly realized this wasn’t doing them any favors.  When one of our kids (particularly my second son) comes to us and says he has saved $60 and wants to buy a video game that costs $59.99 we tell him that’s great, too bad he doesn’t have enough to buy it.  The first time I said this he was dumbfounded, I told him that on top of the $59.99 he and everyone else must pay 13% so the video game now costs $67.99, an additional $7.80.  After ranting and raving about how unfair taxes are, the fact still remained that he didn’t have enough to buy the video game.  This was his first lesson in looking for hidden costs.
  • Borrowing Money: Financial experts insist we teach our children at a young age about borrowing and repaying loans with interest.  This is a very important lesson because there will come a time in their lives when they will have to borrow money (buying a car, home etc.), and we must teach them that they should only incur debt insomuch as it adds to their assets.  The other day my daughter asked me to buy her an app for $3, I told her I would lend her the money but when she got her allowance she would pay me back $3 plus .50 in interest.  This prompted her to rethink her purchase, the app was no longer worth it.  I also borrow money (I pretend to) from my kids and pay it back with interest, they love this part of the game.  The only problem is that they keep trying to lend me money.
  • Pay Them In Large Denominations: I myself am far less inclined to break a twenty for something than I am a five dollar bill.  I know that once I break a twenty it will be gone in no time.  The same holds true for kids, if you pay them in large bills they will hold onto them longer, because they recognize the larger bill holds more value.  I used to pay for chores immediately with the change I had in my purse, quarters, loonies, twonies, whatever, they would take their change and spend it at the local corner store buying whatever they could afford.  When I started keeping a tally of the chores each of them had done for the week and I paid them in larger denominations (i.e. paper money) they held onto it a lot longer.
  • Delaying Gratification: This is a huge life skill which will be used in every facet of their lives.  I make my kids wait 24 hours before they purchase anything if they still want it at the end of that time, then they may proceed.  More often than not they have forgotten about it and have moved onto something else.  This ritual if you will, prevents them from falling prey to their impulses, and let’s face it, the reason so many of us has so much consumer debt is a result of impulse buying.  By waiting they saved their money which can then be put towards something of greater value.
  • Let Them Keep The Change: On occasion I give my oldest son money to buy lunch, if I gave him $10 and asked him bring back the change he would usually bring back next to nothing.  Once I told him to keep the change he didn’t ask me for lunch money for the rest of the week. The theory behind this thinking is simple, when it’s mom and dad’s money its endless, when its theirs it’s not ; thus they become less inclined to overspend.

Best of Luck

Carnforth Self Storage



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