The importance of financial literacy (or financial education) for young people
Financial management is part of adult life. Yet that’s often the thing kids are least prepared for when they leave the nest. Fortunately, it’s always possible to learn more about the world of finance and find the right tools for managing one’s finances.
Financial education: How you can help as a parent
Parents’ role in their children’s financial literacy
As parents, our role is to educate our children and help them become responsible adults. We also have a duty to teach them the basics about finance and give them an understanding of the economic world around them so they know how to manage their money and make the best possible financial decisions.
Financial education can take different forms at different ages. You can start when they’re young by providing board games or a gaming console with educational video games or by giving them an allowance that they will have to learn to manage.
How to kick-start your children’s financial literacy
There are a few things you can do right away with your kids to help them make informed choices. Here are a few examples.
- Give them a piggy bank
When your kids start elementary school, give them a piggy bank! There are plenty of occasions when they’ll come into a bit of money. Teaching them to put it in their piggy bank is an excellent way of introducing them to the fundamentals of saving money.
- Help them open their own bank account
Teach your kids how to use their allowance and not spend it all on frivolous things. This is a good time to set savings goals. You can open a savings account for your children and encourage them to put their money in it. Show them the bank statement after each deposit: that way, they’ll have the pleasure of seeing their dollars grow as the months go by and develop an affinity for saving.
- Learn to say no
While it may be difficult for you to deny your kids certain things, it’s an important exercise for them, as it will help them understand that they can’t have everything, and that sometimes financial choices have to be made.
- Let them do their own shopping
You can also suggest that they buy what they want themselves.
They’ll learn how to compare prices and make choices based on what they can afford, but they’ll also experience the satisfaction that comes from the newfound independence afforded by their personal finances. Managing their own money and making their own purchases will also teach them something about taxes, which are added to the price marked on the product.
By developing these kinds of life skills, your kids will have a good foundation for the future. They’ll understand the limits of a budget and the importance of good financial health.
Want to learn more about the family accompanying services that come with your RESP?
You could also get some tips on how to deal with your own financial concerns!1
Teaching your children how to manage money
Whether you receive a substantial windfall or experience a drastic cut in income, adjustments will have to be made to deal with the new situation.
There are many tools available to help us manage our finances and make the right decisions. The Autorité des marchés financiers has a directory of all financial education tools available in Quebec. The list includes a “true or false” quiz on car insurance, a calculator on the importance of starting to save early, and handy tools and resources to help young people become financially independent.
Our financial education glossary, developed by financial planner Catherine Levesque and published in our e-magazine LA VRAIE VIE (French only), will also help you manage your personal finances on a day-to-day basis. It can help you make sense of some of the financial jargon that can be a little baffling.
Managing the budget is a family affair!
Apart from everyday financial transactions, it’s also important to be prepared, especially with money put aside, for major life events. There are many savings options, such as RESPs (Registered Education Savings Plans). At Kaleido, this education savings vehicle is available in various forms to suit every family’s needs. You’re sure to find the right product for your situation: birth of a baby, purchase of a home, retirement, disability, etc.
You can start using strategies to take control of your finances and avoid unpleasant surprises simply by following the four tips below:
- Get your budget in order
- Create a reserve fund
- Evaluate your financial profile (more like a grasshopper or an ant?)
- Consult a financial planner, advisor or accountant
Financial literacy is a broad subject that everyone should take seriously. The good news is that there are plenty of resources out there to assist you!
(Updated - 1st published March 3rd, 2022)
Calculate how much you could earn with a RESP easily.
Takes about 5 min.
1. Some conditions and limitations apply. Promotions, benefits and other advantages of our family support services are subject to change without notice and may not be available in certain areas.
