Kids And Money: Debt Is Important To LearnMar 16, 2018
In the March podcast, our Licensed Insolvency Trustees (LIT) discuss the benefits of improving your child’s financial literacy over the spring break. During the podcast, our LIT’s speak about a number of topics related to #KidsAndMoney including:
- The importance of teaching your kids the fundamentals of spending, budgeting, debt management, responsible use of credit, living within your means, creating savings goals, etc.
- How parents can turn everyday life experiences into teachable moments.
- How to reinforce financial lessons during spring break to avoid taking on new debt.
- And a look back on the results from a 2017 BDO spring break spending poll.
Depending on the age of your child or children, the lessons you’ll want to touch upon when it comes to money and debt will be different. Here are a few insights from the LIT’s based on the age of your children on how to incorporate money lessons in during the break.
Young Children (9 and under)
For kids of this age, focus on the basics, as it is at that age that they really begin to understand that money has value. It’s a good time to focus on topics and skills such as:
- Ways for them to earn money.
- Why it’s good for them to save some of their money.
- How money plays a role in everyday life.
Make these lessons interactive by using financial-based board games and get them involved with activities like buying the groceries. Allow them to go through the process of paying for items to help them gain a stronger understanding of how quickly things can add up and why they can’t always get what they want.
Pre-Teens and Teens
As your children start to get older, it’s a good time to introduce them to more advanced topics including:
- Using money and making payments in a digital world.
- Keeping that FOMO (Fear of Missing Out) in check.
- The basics of consumer debt such as using and managing a credit card.
Doing it in a real world environment is a great way for them to learn. If they have money to spend over the break, let them spend it using a debit or prepaid credit card. If they spend it all, don’t bail them out. Instead, use it as a teachable moment about the challenges that debt can bring if not managed carefully.
Don’t forget that leading by example is one of the best ways to teach your children money management. If you are trying to instill good saving habits, getting them to track their spending, or showing them techniques for responsible management of debt, share with your kids what you’ve learned throughout the years and help them develop the good habits you have discovered over the years.