As our children head into their teen years, we hope they have developed an understanding of the value of money.
We also know they are prone to quick action with little concern for the consequences – and that means they sometimes spend what they intended to save.
This is the time to guide your growing children towards financial responsibility and help them understand that they can start saving that babysitting money with big goals in mind.
Setting up investments, or a savings account, for your children should be on your to-do list, if you haven’t already. Any money that comes in from generous relatives, or odd jobs that kids get paid for, should go into the bank in some way, shape, or form. (It will also save you the chaos of “where is that money Aunt so-and-so gave you for Christmas?” because, as we know, kids can’t keep track of anything, let alone thin pieces of money.)
Something as simple as a bank account will provide kids and teens with the tangible evidence that saving their hard-earned (or gifted) money will allow it to grow – slowly in a regular bank account – and be there for their future wants and needs.
Being financially responsible isn’t just about saving money. It’s also about looking forward, recognizing when money will need to be spent, and planning for those eventualities. We’d all like to be millionaires, but it always feels like there are too many obstacles keeping us from reaching that dream.
The time to learn about debt is before we start accumulating it. Kids who plan to head to post-secondary education are usually at a disadvantage, money-wise, because the costs are so exorbitant that many can’t afford to head to higher learning without taking out a loan of some sort.
In our home, we started RRSPs for the girls soon after they were born. If we’re lucky (and they choose to go to university) they might have part of one year paid for. But this isn’t about what you “should have” done, instead focus on what we can do now with our kids to help them save and grow their wealth.
While minors are not able to open bank or investment accounts, parents can provide consent, open joint accounts, or purchase investments on a minor’s behalf. Talk to your teens about credit and when and where it’s appropriate. They see you using that credit card – make sure they understand why, and how to avoid the pitfall of being unable to pay off the balance each month.
When teens have a steady income, the time is right to show them the benefits of investments. Let them speak with your family’s financial advisor (if you have one) or research different investment options on reputable websites.
Learning techniques now for how to manage their money will give your kids a financial advantage. It is possible to achieve financial stability early in life. A great resource for building wealth can be found at How to Become a Millionaire in Canada, where they share more in-depth tips on money management that can be applied to anyone at any stage of their investing and financial journey.
Related: Frugal tips from a working mom
Join the conversation: Do your kids or teens have RRSPs or other investment accounts? What are they saving for? Do you feel they understand the concepts of money, debt, investments and wealth? I’d love to learn how you’re supporting your children so leave a comment.
I’m not sure my girls fully understand yet, but we use real-life opportunities to teach them, and they’re getting there.