Valley First

Parent Tips This Holiday Season

Financial tips for parents this holiday season

For many Canadian families, the holidays are associated with financial stress, especially when the bills inevitably roll in with the New Year. For parents who spend first and think later may want to reconsider that strategy—their children are watching.

Let your kids in on the secret

Research has shown that 34 per cent of children think there are financial secrets in their home. It can seem uncomfortable for some people to let children in on their financial situation, but it’s so important. When children enter their mid-teens, parent can start bringing them into financial planning meetings. Then they can learn how their parents spend and save their money—it’s usually very eye opening.

Teach them the importance of budgeting

Budgeting and cash flow management are important lessons to learn. Something as simple as a budget worksheet can show children how much money they spend and how much they save. The average teenager spends $100 a week and it’s good for them to understand where that money is going and that if they spend wisely, they can save money for the future.

Educate them on the importance of compounding

Compounding is a simple concept, but one that many people fail to capitalize on. Showing your children the difference they’d have to save monthly for retirement if they started saving now compared to starting to save at age 45, is a great illustration. Kids also love seeing the figure rise even more with the contribution matching with RESPs.

Let them earn their money

Some children view allowance as an entitlement. This can lead to misunderstanding about where money comes from. Instead of asking parents for money when they want to purchase something, children can do extra chores to earn that money. It really teaches children the connection between work and money.

Give the gift of financial literacy

When thinking about stocking stuffers for your children, consider a book on financial literacy written for children. There are some great books out there like ‘The Secret Life of Money—A Kid’s Guide to Cash’ by Kira Vermond and ‘The Complete Guide to Personal Finance: For Teenagers’ by Tamsen Butler. Giving your children the knowledge and understanding to make sound financial choices in life is one of the best gifts you can give.

 

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