Understanding how and why to save money, is one of the most important lessons that children need to learn.
It is never too early to start teaching children about money. When they are young, you can teach them the difference between coins and other sizes of currency. Once children grasp this concept, you can start to incorporate more learning experiments into your children’s daily life.
The summer is a good time to have these conversations with your young children. This way they can carry these lessons into school life where there can be pressure to buy or ask for things their friends want or have.
When they are young, you can start with simple conversations. At the grocery store, you can show your child how one item costs more than another, and how to determine which item has more value.
You can also talk to them about the differences between “needs” and “wants”, even at a young age. For example, you might want to show them that milk is a need, and explain that it has multiple uses for the whole family – in cereal, coffee, cooking, etc. After that, you may want to say that a toy car in the aisle is a want, because it’s not something that can be eaten and it’s not on the shopping list.
There are many more fun activities, exercises, and concepts that you can find online or in parenting books. You can also ask your friends to see if they are teaching money concepts, and if so what is working and what isn’t.
Since children will all have different spending preferences, the key is to listen to them, observe and learn from them. Then you can teach and guide them to understand the importance of building a nest egg.
Our video “Know Your Investment Account Performance” sets out what to expect in your annual Investment Performance Report and explains personal rates of return based on your specific account.