Book an appointment

If you have children or grandchildren, you want the very best for them. This became especially evident throughout the pandemic and post-pandemic transition. With their mental, physical, and emotional well-being on your mind, have you ever considered their financial well-being? The sooner your child learns financial life skills, the sooner they can develop good money habits that will benefit them as they transition into adulthood.  

Here are 3 ways to improve your child’s financial well-being:

  1. Distinguish between needs and wants
  2. Teach them how to make money while they sleep
  3. Encourage them to say “Thank You”

1. Distinguish between needs and wants

One of the basic building blocks of financial well-being is the ability to distinguish between needs and wants, especially in a consumerdriven culture. Developing self-control at an early age is an asset when it comes to managing money.

As a parent or grandparent, it is essential to communicate that needs are things we cannot live without, like food, water, and basic housing. Whereas wants are things that are nice to have, but we can live without.

Two factors that have been contributing to young adults struggling with consumer debt are the lack of contentment often rooted in comparing themselves with their peers, and the inability to distinguish between their needs and their wants.  

According to a 2022 study by Equifax Canada, the average consumer debt of 18–25-year-old Canadians is $8,345, and that rises to $16,832 for 26–35-year-olds. Another 2022 study from Statistics Canada reported that Canadians owe $1.82 for every $1 earned.  

Here are some guidelines to help your child develop the discipline of distinguishing between needs vs. wants: 
  • Ask your child if the items they want to buy are needs or wants  
  • Be disciplined in saying “no” to your child and communicate your reasons as to why it may not be sensible to have what they currently want 
  • Continually reinforce that their self-worth is not based on what others have 

2. Teach them how to make money while they sleep

If you want to set your child up for future financial success, help them comprehend the importance of having money work hard for them through the power of compound interest.   

To start, they need to have the skills to differentiate between saving and investing. Saving is simply having the self-control of not spending all your earnings. On the other hand, investing is taking what you saved and putting it at risk. This can be in the form of owning shares in a business or lending your money, where the payoff for the risk is the accumulated interest.

Secondly, introduce them to the Rule of 72, which will teach them the power of compound interest and show them how quickly money can double. For example: 72 divided by 6% equals 12 years for money to double.   

Here are some guidelines to help your child develop the habit of saving and investing:
  • Play investment related board games with them, like Cashflow 101 by Robert Kiyosaki, Monopoly, Settlers of Catan and the Game of Life  
  • Let them develop hands-on experience by setting up a virtual stock exchange game for them   
  • Talk to them about their savings account at the bank and ways they can earn higher interest 
  • Introduce your child to the RESP plan and tell them about the companies they invested in. Provide them with the tools to learn more about those companies and have them share with you what they learned 

  

3. Encourage them to say “Thank you” 

Gratitude is not only good for your child’s mental and emotional health; it will also improve their financial well-being as they progress through life.   

Teaching children to be grateful and to say thank you is a fundamental ingredient in turning what they have into “enough”. The belief of having enough will lead to greater contentment, self-esteem, self-worth, and personal growth. It will also yield benefits when they enter adulthood because it will reduce their susceptibility to retail therapy to manage stress and keep up with their peers. 

Other benefits associated with children saying, “thank you” is that they recognize the value of others and will treat people around them with dignity and respect. This, in turn, will help them have a greater impact on the world around them.   

Here are some guidelines to help your children practice gratitude: 
  • Give your children the gift of your presence rather than presents  
  • Give your children the opportunity to practice generosity by researching a social issue or charity in your community. Have them set a goal for how much they want to donate or volunteer their time.  
  • Model and encourage saying “thank you” in public to people who help them or provide a service to them (For example: at restaurants and shops) 

Improving the financial well-being of your child as they go backtoschool this year will help set them up for success now and far into the future. 

Families are the basic building blocks of society. At Financial Literacy Counsel, our vision is to create a financially literate world of stronger families and communities for generations to come.  


Source: https://www150.statcan.gc.ca/n1/daily-quotidien/220912/dq220912a-eng.htm

Source: https://www.advisor.ca/news/economic/statistics-canada-says-household-debt-ratio-up-in-second-quarter/

Source: Equifax National Consumer Credit Trends Report, 2022 https://www.blogto.com/city/2022/06/how-much-debt-normal-average-canadian-age-group/

Source: Statistics Canada, July 2022

Privacy Settings
We use cookies to enhance your experience while using our website. If you are using our Services via a browser you can restrict, block or remove cookies through your web browser settings. We also use content and scripts from third parties that may use tracking technologies. You can selectively provide your consent below to allow such third party embeds. For complete information about the cookies we use, data we collect and how we process them, please check our Privacy Policy
Youtube
Consent to display content from Youtube
Vimeo
Consent to display content from Vimeo
Google Maps
Consent to display content from Google
Spotify
Consent to display content from Spotify
Sound Cloud
Consent to display content from Sound
BOOK AN APPOINTMENT