Father’s Day is just around the corner. If you’re a dad, you certainly may enjoy getting cards and gifts, of course. But, over time, you will gain even greater satisfaction by what gifts you can give your children – part of that gift giving is the wisdom of sound financial education.
Financial literacy is an essential life skill. Teaching children how to manage money will help them throughout their lives. According to the Financial Consumer Literacy Agency of Canada you should start the conversation as early as possible. If you start early you can build their knowledge as they grow. A good starting point can be as simple as talking about things children want versus what they need. This can lead to other conversations about spending, how much things cost, prioritizing, saving, and making informed choices.Here are 5 financial lessons that dads can teach their kids to help them be more financially literate:
Teaching children how to save can help them learn to be financially independent. When talking with children about saving, discuss goals that appeal to them. For example, they could save for a particular toy or special activity.
As children get older, talk to them about saving for longer-term goals such as post-secondary education, saving for a down payment on their first home and/or retirement.
If you are contributing to an RRSP (employer sponsored plan, individual retirement account or both), explain how you build these accounts now, while you are working, so you’ll have enough money to enjoy a comfortable retirement someday. And you can bring your children into the picture, too, by telling them that another financial goal is saving enough to help send them to college or university.
Emphasize the importance of patience and how investing is not a 'get rich quick' scheme. Teaching children delayed gratification will help combat the 'buy now, pay later' mentality that could put them in debt. So, as much as you can, reinforce the idea that waiting pays off and that investing as early as possible is important, so you can give your investments a chance to grow.
We all know that you can’t always get what you want. Stress to your children that you can’t just splurge on big purchases whenever you feel like it, because such behavior can lead to bad outcomes. Use concrete examples: If you have a car that’s several years old, tell your children that it would be nice to have a new one, but you simply must wait until you can afford it.
Tell your children that, no matter how good a saver you are, or how thrifty you try to be, you still have debts, such as your mortgage payment, and it’s important to pay these debts on time. You may not want to get too detailed about the consequences of missing debt payments – bad credit scores may not be that easy for children to understand – but you can certainly mention that if you’re always late on payments, you might find it harder to borrow money when you really need it.
These financial lessons are a good place to start when teaching your kids to value and manage money. By sharing these principles with your children, you will, at the least, give them something to think about, and you may well find that you’ve helped start them on the path to a lifetime of making solid financial moves. And who knows? If they truly master the ideas you’ve taught them, one day they might give you some really nice Father’s Day gifts using money they have planned and saved for.
At Edward Jones, we can help you work toward achieving your financial goals. Contact your local Edward Jones advisor about a financial strategy that makes sense for you.