Many young Canadians are not taught simple financial skills during their adolescent years. As adults, we can help positively influence future generations by instilling basic financial literacy at an early age. Here are some tips you can use to help build a solid financial foundation for the young person in your life.
1. Set goals and reinforce spending discipline
Every teen has their eye on something they wish to purchase. Have your teen research, make decisions, and set financial goals to save for items they want to buy. This will teach them to make informed decisions, avoid impulse purchases and to value what they have worked hard for.
2. Understand how the media impacts spending
Teens are constantly bombarded with ads that prey on their insecurities and desires. Teaching teens to recognize when they are being targeted with ads and teaching them to make smart purchasing decisions will help reduce unnecessary spending. This is where their financial goals come in to play. By taking the time to pause and carefully consider purchases, to research the product, price shop for the best value and to pay attention to reviews of both the product and the vendor. It’s important to talk about needs versus wants and the long-term value of purchases.
3. Open a savings account
Open a savings account for your teen. This will be their foundation to start saving and a place to deposit their income once they start working. Saving is critical to managing expenses, building wealth and to ultimately becoming self-reliant.
4. Establish a source of income
Encourage your teen to get a part time job. This will help develop a relationship between time and money. In addition, they will gain valuable work experience and be provided with a solid foundation of money management and budgeting.
5. Pay a bill or two
In Canada, only individuals over the age of 18 are eligible to enter a legal contract, however, you can still teach your teen to pay bills on time by having them reimburse you each month for things like their cellphone. Once they turn 18 you are able to transfer the contract to them. This will teach them to pay their bills on time and help them build credit worthiness, once the contract is in their name.
6. File a tax return
An invaluable lesson that will set your kids up for success later in life is learning how to file their own income tax return. There are several online tools to make the process easier when claiming income, tuition or qualifying for federal or provincial credits. If you feel comfortable sharing with them, you could show them how you complete your own tax return as well. By starting early, your teens will understand the flow of money and the importance of keeping their bills and receipts organized.
It’s never too early for financial literacy
Remember that it’s never too soon to start teaching basic financial skills to the young people in your life by promoting real life financial experience. Starting to build healthy financial habits early on will help set up our future generation for success!
For more tips and tools to help better manage money and finances please visit the government of Canada’s Financial Consumer Agency of Canada site by clicking here.