Teaching your kids about money when they’re young can help set them up for success in the future. Not only will they have an increased knowledge and understanding of managing money when they become adults, it can also positively influence their behaviours when it comes to managing their money.
The biggest questions though are how early should you start talking to your kids and what things should you teach them? We sat down with Jacques DeCorby, Vice President of Retail Banking, Conexus Credit Union and Dad of three, to learn more on how he has the #MONEYTALK with his kids and the tools he uses.
When did you first start teaching your kids about money? And what are some of the things you are teaching them?
We started talking to our kids early teaching them about the value of money and the power of savings and giving behaviours. We also talk a lot about a need vs. a want and have discussions on how money makes them feel, whether they’re saving it or spending it.
Do you give your kids an allowance? If so, when did you start and how did you determine an amount to give?
We started giving our children an allowance all around the same time, with the oldest being about ten and our youngest being five. I don’t recall how we settled on an amount to give them, but it was an amount that we could fit into our budget as well as help our kids see the value of money. We haven’t adjusted this amount, but it does make sense to periodically review the amount as it could illustrate the influence of inflation.
When teaching your kids about managing money, are there any tools you use?
We use the save-give-spend tool – pay yourself first with savings; give back and support your community; and the remainders can be used for discretionary spending. In our household, we agreed on the split of 40-10-50 but another common split is 20-10-70.
We use this tool when splitting any money they receive including their allowance and money they receive as gifts. With my oldest starting a part-time job, we also use this tool to help him manage his pay cheque. Though we have set these split percentages, we do also give the option to put more of it into their savings. With three boys, it is interesting to see their different personalities – our oldest can’t spend it fast enough while our younger two are more focused on saving.
Another tool that we have introduced is the Conexus Credit Union app. At a certain age our kids started getting their own electronic devices or phones and we made sure they added the app to their device to show them how to use it. It’s always fun to watch their reactions as they see their savings grow.
What advice do you have for parents wanting to teach their kids about money?
Save. Save. Save. Plan. Plan. Plan. Budget. Budget. Budget.
When talking to your kids about managing money, identify savings and set targets and milestones. Expose them early to different short and long-term savings vehicles. Most importantly, let them make some spending decisions on their own after you’ve had the discussion on needs vs. wants. For example, if they really want that pack of gum at the store, have them purchase it using their own money. Be sure to follow up from time-to-time to talk about their spending decisions and ask them how it made them feel and if they’d do anything differently.
Also, as your kids become older (teens), I recommend parents start introducing the concept of credit ratings and the importance of building and maintaining a strong one.
By teaching your kids about money, what impacts can this have for them later in life?
By teaching your kids about money they will have an increased knowledge and understanding of managing money as they get older. More importantly, they will build positive behaviours and money management skills that will help minimize stress later in life that tends to affect so many other aspects of our overall health and well-being – physical, mental, social/family, occupational to name a few.
Any other advice you’d like to add?
It is important that young people also start to build a strong network of trusted advisors around them including financial advisors. Talking about money can be hard, and introducing them early to money allows them to gain the confidence and not be scared to ask questions when it comes to money.
Thanks Jacques! These are all great tips and advice. Financial literacy is important for all ages. We can’t wait to start having the #MONEYTALK with our kids and using some of the tools you shared with us today!