Class will soon be back in session but for now, it’s the children who are dishing out the grades on financial literacy — to their parents.
Nearly half of Canadian children aged to 11 to 14 gave their parents a grade of “B” in a new ING Direct survey that asked whether they think their parents are good financial role models. Parents seem to agree; when asked to reflect, 47 per cent also assigned themselves a “B” for their financial mentorship.
Time To Hit The Finance Books
With back-to-school shopping at the forefront of many parents’ and children’s minds, it’s a good time to spark a conversation about personal finance. Seventy-six per cent of parents surveyed in the online study said they used school shopping as a way to involve their children in financial decisions.
It makes sense; buying new clothing, shoes, and school supplies can be expensive. The survey, which was conducted in July 2013, found that parents are planning to spend an average of $252 on back-to-school shopping. Why not use the purchases as a way to teach kids important money lessons?
“Teaching our children about money doesn’t have to be a complicated,” said Peter Aceto, CEO and president of ING DIRECT. “Using everyday situations, like shopping for back-to-school items or a trip to the grocery store, is an easy way to introduce kids to the concepts of budgeting, spending and saving.”
Kids Are Keen To Learn About Budgeting
Don’t write kids off as uninterested learners; the survey found that children want their parents to speak to them more about the following financial matters:
- How bank and credit cards work (38 per cent)
- What things cost and why (36 per cent)
- How to save their money (27 per cent)
- How to manage their money (26 per cent)
Create A Real Life Lesson Plan
Canadians have a general idea of what financial advice to pass on to their children. Just over half of Canadian parents surveyed feel that living within their means is the best lesson they can give; smart spending and setting goals for saving were also considered important.
Exactly what parents need to teach kids about money depends on the children’s ages. The Financial Consumer Agency of Canada offers the following suggestions on what financial lessons are appropriate for different age groups:
Ages four to eight:
- understand that people have a limited amount of money to spend
- use money to buy basic goods and services for simple transactions
- divide allowances or other money received among the financial goals of saving, spending and sharing
- understand that there are choices when it comes to money, and that money spent on one thing means that there is less money available for something else
Ages nine to 14:
- recognize the difference between needs and wants
- understand the importance of saving a portion (for example, 10 per cent) of all money they receive and the value of an emergency fund
- create a savings plan for short-term and long-term financial goals
- identify regular financial commitments families have and know that families use household income to meet those commitments
- create a simple budget for an activity or event
Ages 15 to 18:
- understand the pros and cons of different payment options such as cash, debit cards and credit cards
- understand different kinds of basic investments (GICs, stocks, bonds and mutual funds)
- understand the time-value of money (for example, past, present and future worth of money) and opportunity costs
- understand the concept of “living within your means” and why it is important