One of the amazing benefits of writing this blog is talking to our readers. We get a lot of great follow-up comments and questions about all-things money. Perhaps one of the most common questions we get involves kids and money. How does a parent/loved one talk to their kids about money? How do you improve their financial literacy if yours is not strong? How can they learn from your mistakes?
It’s these conversations and this Globe and Mail article passed onto us from a good friend (Thanks, Gail!) that had us thinking about money and kids. According to the Globe, as a collective, our financial literacy SUCKS. Here is what they said,
“ This lack of financial literacy, as it’s called, earned the average Canadian a C grade – 62 per cent – in the federal government’s 2014 Canadian Financial Capability Survey, which posed 14 questions about inflation, debt repayment, banking fees, credit reports, and other dollars-and-cents topics. Want to guess how many got a perfect score? Just 2.7 per cent of participants answered all 14 questions correctly, while nearly a third got at least half the answers wrong.” – Globe and Mail, February 8, 2018
Holy. Shit. We. Are. Screwed. Well, not really, but based on this, we have a LONG way to go. If anything, just know, if you feel, based on these stats, that you’re financially illiterate, , you clearly are not alone! This further proves that we need to start prepping our kids NOW for financial success.
We are launching a new series, aiming to improve your financial literacy, from infancy all the way to retirement. Today, we start with our youngest demographic; newborn to kindergarten.
Obviously, those who fit this age group won’t be reading this. Unless you’re raising a 2018 version of Doogie Howser, in which case, you’re obviously doing something right. For the rest of us, this post will be targeted to those who live with and/or have kiddos in their life. You don’t need to be a parent/guardian to help teach kids the fundamentals of money. It all comes back to being a village – parents may look to their siblings, friends, and others to help navigate these complicated and tricky financial waters.
Last year, we wrote a post on how we plan on teaching Emily financial independence. Tolga and I mapped out four financial truths we would teach her:
Lesson #1: It is never too early to start saving
Lesson #2: Even if you suck at math, you still need to care about money
Lesson #3: Be smart with your credit
Lesson #4: Learn the importance of paying your debt
It’s important for families to have open and honest conversations about money. When you have an infant/toddler/kindergartner, the money never seems to be enough. Between daycare, clothes, toys, diapers, and the million other things, it can get overwhelming. What are your lessons you plan on teaching your kid(s)? Now is the time to sit down and talk about this. We based ours on our experience with money and the many ups and downs we have had with it. If you have nieces and/or nephews, what do you want to teach them about money? What sort of example do you want to be?
At this young age, you can’t really talk to kids about money, but as we know, no matter what age, kids are sponges. Emily will mimic our words and actions (both good and bad) and even at the ripe-old age of almost three, Tolga and I need to be mindful of everything we do. This includes how we handle our money. If you’ve read our blog long enough, you’ve seen the importance of budgeting, organizing your finances, and setting financial goals. These are the building blocks for your kids’ financial success.
We also talked about the importance of RESPs. Saving now for their future is one of the most important things you can do for your kids.
At this stage, most of your financial literacy for little ones is going to be actions more than words. Start having money talks with your village. Need grandparents to stop buying toys and clothes? Ask them to re-distribute those funds into a savings account or RESP. Or, could they keep those new clothes and toys at their house? Birthday parties from ages 1-4 can be expensive, but will they remember the celebration? The first birthday is more of a, “holy shit we survived the first year of parenting” and it’s more of a thank-you party to yourselves and your village. Perhaps think about scaling down the party until kindergarten when they can actually remember them.
Remember, just place one foot in front of the other. The responsibility of having a child can be crushing, but, know you have a lot of valuable resources at your disposal. By simply reading this post, you’re doing more than you did even five minutes ago. We have faith that you will figure this out! Next week, we’re going to talk about financial literacy for ages 5-10.
You are amazing!