If you want to educate your children about finances, it’s best to start early, says the executive director of an N.L. credit counselling charity.
Al Antle of Credit Counselling Services of Newfoundland and Labrador says young children may believe there is an endless supply of cash that can be taken from a bank machine, or that all it takes is a tap of a debit card to pay for an item.
“In order to take money out of that machine you have to put money in there to start with,” he told CBC Newfoundland Morning.
“By the time a child or a young adult gets to post-secondary they’re probably 18, 19 or 20 years old. And here we are with ‘no’ for an answer — there is no finance experience and no compass to go by.”
Many parents try to shield their children from stress, he said, and since finances are a huge source of worry for many, they don’t try to teach them even basic financial awareness.
“It speaks to us as parents and we’re genuinely concerned about our kids. But, regrettably, this is an acquired life skill — it’s something we learn. It’s something we learn by doing.”
An easy way to start, said Antle, is to make sure kids know the difference forms of currency we have available to us. By doing this, he said, they’ll be able to recognize that even in our cashless society, we are spending money when we swipe or tap that debit or credit card.
When a young person heads out to college or university, their financial expertise is put to the test. Antle says parents should continue to help them with their finances.
“It’s a critical piece for your kids to leave home with and they need to understand that the first priority they have is their school expenses,” Antle said.
“So, make sure your tuition, your books, the things you need to do your job, are paid for first. You encourage them to prioritize their actual expenses.”
Antle said it isn’t a good idea to deposit a huge chunk of money in your post-secondary student’s bank account and expect them to be responsible with it. A better method is to deposit funds into their accounts at regular intervals so they are able to budget more effectively.
He said parents also need to be realistic when it comes to the need for their college-aged kids to have some money for extracurricular activities.
“You do need to also factor in the fact that you need some money for fun.”