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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.
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:
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).
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.
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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