Learning to have conversations with your kids is a great way to start teaching them about budgeting. I sat down recently with Branch Manager, Kelly Towns, from Aldergrove Credit Union and we chatted about what important conversations you should have and next steps on creating and teaching budget for kids.
I worked at Aldergrove Credit Union myself for a few years and found it so useful to discover which accounts and banking products were best for our lifestyle. I’ll highlight a few towards the end of the post that are great for saving, both for kids and your own retirement. When being asked or recommended different products/bank accounts it’s most likely for your own benefit. Be sure to ask questions and continue to learn what’s available to you to help you save more.
Photos by Julie Christine Photography | This post is sponsored by Aldergrove Credit Union. As always, all views and opinions are my own.
1. Basic Budgeting at a Young Age
Having open conversations with your kids at a young age about money allows them to get a greater grasp on budgeting and how you make purchasing decisions. During your day to day activities, like grocery shopping, is a great time to teach your child about budget.
When your children are asking to purchase items for themselves they are opening up an opportunity for you to share what’s in your budget. Sometimes they may get the item and other times they may not. It’s allowing you to teach your kids about money and when and how it can be spent.
One of the most important things to teach them at a young age is that there is a limited supply. Ways this can be taught is through birthday money, Christmas, allowance, selling toys, etc. You can implement a strategy that allows them a portion to spend and a portion to save.
2. Open up a Savings Account
Accounts can be opened for your child from the day that they are born, though most credit unions would recommend that they are old enough to sing their own name. Opening an account with an older child would allow them to see the process from the beginning and the start of building a relationship with the financial institution.
At this age you are empowering your child again to create those conversations, build an understanding of the process and create positive habits around basic budgeting and money management.
3. Give them Money to Spend
A perfect opportunity for this would be when you need to buy a gift for a birthday party or special occasion. Establish a budget with your child on how much they can spend on the gift. You could even take out cash and let them visually see the money you are about to spend. Walking through the store, allow your child to pick out items and speak to them about how much each one costs and show what fits within your given budget.
You are not only teaching more basic budgeting and the value of money but also teaching the importance of giving, rather than receiving.
4. Explaining and Building a Healthy Credit
We live in a world that hardly uses cash to buy purchases anymore. Putting that into our kids eyes, they see us buying endless amounts of items through our plastic cards. They don’t see the value and cost in paying or counting out money, nor do they understand the concept of credit if it isn’t explained to them.
Share with your children the concept of a debit or credit card and continue to have conversations about where the money comes from and not to spend money if you aren’t able to pay for it in the moment.
As they grow up continue the conversation further and share how to stay secure with your credit card to avoid theft/fraud.
5. Create Financial Goals
Depending on the age of your child you can break this down to be really simple or an older kid could be more complex and incorporate larger goals. Create a plan that introduces a save/spend percentage. Whenever your child receives money you can decide to put a certain amount of money away in savings and allot the remaining amount for their spending account.
You can easily open more then one sub account at your banking institution and label them for each, savings and spending. This will start to teach your child from a very young age, with birthday money, Christmas money and leading into their first job how to save for their goals but still allow for some current spending
It’s important for yourself as a parent to also know what you can do for family budgeting. We all know how expensive it can be for a child to attend post secondary school or pursue their dreams after high school. There are government regulated accounts that are supported through credit unions and banks that aid you in the process of saving money. The three most important accounts that you should become familiar with are:
What is a TFSA?
A Tax-Free Savings Account. Allows you to set money aside and save money, earning your interest tax-free.
What is an RESP?
A Registered Education Savings Plan. This is a dedicated saving account that allows you to save money for your child’s education. The government also allots grants for these accounts and the money can start coming out tax-free when your child attends post-secondary education.
What is an RRSP?
A Registered Retirement Savings Plan. Allows you to save money for your retirement tax-free and deposits allow you to save money during your year of income tax. Withdrawals from the accounts are taxed.
Interested in Further Training?
Each One Teach One Program — started with VanCity credit union, all credit unions can use this program. 3 day program that teaches you how to be comfortable with public speaking. Basic budgeting, intro to banking, RRSP’s, etc 17 different workshops. (Non-branded, it’s about teaching education to other people) targeting: youth. Still in the devolvement stages in the Fraser Valley. To learn more about a workshop email: email@example.com