Talking Money and Finances with Your Children
According to an Ipsos Reid poll on Canadians’ financial habits, only 18% of British Columbia parents speak with their children about money, finances, budgets and savings. In comparison, 44% of Canadian parents say they have broached the topic with their children.
In my previous blog post Teaching Money Concepts to Kids, I discussed how it is crucial for parents to instill the importance of saving money in their children as early as possible. As children get older and have more needs and wants, their lifestyle and future goals become intertwined in their spending habits.
For teenagers, the end of high school is a life-changing event. They have to start considering post-secondary education fees, apartment rentals, transportation costs, etc. Being able to navigate a new found financial independence takes planning and having the experience of doing so from childhood sets young adults up for success.
The idea of preparing children for a lifetime of budgeting success is even more integral in BC where the cost of living can be quite high compared to other Canadian communities. This places even more of an importance for BC parents to provide their children with good saving habits from an early age
In the aforementioned Ipsos Reid poll:
- 16% of Canadian parents surveyed said they involve their children in money management decisions; in comparison, BC residents only involve their children 8% of the time.
- 84% of B.C. parents indicated that their children do not save any money each month, compared to 67% of Canadian parents.
To get the conversation started with your children, it is best to begin with some basic questions that illustrate the need to budget wisely in order to ensure they get what they need and want. You can ask them:
- Is there anything you feel you need to buy in the near future?
- Is there anything you want to buy in the near future?
- What are your plans for next year?
- Do you have anything you need or want to do in the near future?
- How do you plan to pay for everything that you need and want?
Parents should be honest about what they are willing to pay for, and where they expect their children to contribute. Young adults should be careful to not fall into debt as it can hinder their ability to go to school, purchase a home or car, or take a vacation in the future.
You can help them prepare a savings plan by discussing when they expect to be able to make large lifestyle purchases. With a high value goal in mind, you can set your children up to be independently successful in growing their future finances.