Teaching our Children Financial Responsibility

Right now, our two boys don’t have a lot of questions about finances. In fact, I have found that many of the children of clients that meet with us don’t know what questions to ask. I believe that this is not because they aren’t interested but rather because the topic can be so overwhelming.

I believe strongly in teaching financial responsibility to our children. I also believe that this often happens organically in our homes. Our children absorb financial values by watching our behaviours and listening to what we say. We also have the opportunity to be intentional in how we speak about money. Here are four things that happen in our family, mostly intentionally, in an effort to raise financially literate kids. I very much welcome comments or ideas that worked well (or are working well) in your family.

  1. Talk about money:

We try to include discussions about money in our regular conversations. When we talk about money, we have found it reduces anxiety around the topic. Here are some things we try to intentionally talk about:

  • Mistakes we’ve made with money. I’ve definitely made mistakes! For example: When I was a teen, my brother and I badly wanted to buy the Atari 2600. It was $249.99. My dad said to wait because the price was going to go down. We thought our dad was CRAZY! Did he realize we were talking about the Atari 2600?! So, my bro and I bought it and two months later (no joke) the price dropped to $29.99. BIG LESSON LEARNED.
  • How hard it is to make money and how easily it can be lost: Tell the stories of how you had to scrimp and save to buy your first home. My boys are definitely tired of me talking about my university days and how there was one month where my bank account had $2.47 at mid-month and that needed to last me to the end of the month. Can we say…hot dogs and ichiban noodles?!
  • How we view money. One of my favorite phrases when talking about money is, “Money is just a tool to be used to do the things that we feel called to do while on this earth.” That’s it. If we acquire a bunch of money but never spend it…what a waste! It would be better to give it away.
  • Being generous to others. We started a tradition a few years ago where we give family member some money to give away at Christmas. We sit at the table and go through some of the charity giving booklets that we receive in the mail. One year, our youngest was quite excited to buy goats for a family. We have had some great conversations around giving as they have gotten older. It’s been a fun activity to do together.
  • Good investments we’ve made. It’s also good to tell our kids some success stories where we made good investment decisions. Every once in a while, I will talk about a positive investment we made such as purchasing our home or putting money away into investments regularly.
  1. Save for extra things even if you could just go out and buy it

Our kids watch us. Yep, they do! If we go out and buy something whenever we want, it doesn’t teach our children to be disciplined with their money. Recently, I wanted to upgrade our sound system. We talked about saving for it. Then we listed our current sound system for sale and sold some of it. We updated them on the status of the savings (whether they wanted to hear about it or not) and celebrated when I installed the system, including forcing them to listen to my 80’s music at a loud volume (whether they wanted to or not).

  1. Invest their money

Our boys had saved some money over time from birthdays or work. We talked to them about investing their money and the benefit that investing could have. I think this is an important point – They needed to give the green light to invest their money. It had to be their decision.

We then opened an investment account and gave them updates on the status. For the first year, I made sure the portfolio was up through small additional investments of Dad. This gave them some initial confidence in investing. I made sure I communicated that the investment will go down at times and when it does…INVEST MORE! Nowadays, I don’t top up the accounts. They get the full experience of the investment market (the good and the bad) so that they learn to be comfortable with various markets.

  1. Have them put skin in the game

I am a big believer in our kids having to invest something into what is important to them. That investment can be time, money, materials or thought.  Right now, we are considering how to apply this principle in funding post-secondary education as our eldest moves into this new world. We feel that it is important for our boys to have a level of ownership and financial responsibility in their post-secondary choices be that school, work or travel.

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Mother and father with baby