The reality is that your child won’t learn about personal finance while attending school. Sure, they could get a finance degree, but it’s unlikely they’ll learn about balancing a budget. As parents, it’s relatively easy to help guide your kids to financial success; it just takes a few tips.
Build a budget together
The majority of university students will quickly realize that they’re cash flow negative since they have limited income. While it’s not practical for them to pick up a job to pay for everything, the idea is to show them how budgeting works.
Another strategy is to show your child how your own household budget works. They’ll see your income and expenses and understand the importance of spending less than you make.
Encourage them to build their credit responsibly
Students in university should start building their own credit scores. That means it’s time to remove them as supplementary users on your credit card and cell phone plans. Once that’s done, they can open accounts under their own name.
It’s vital to explain to them
Encourage them to save
If you’re worried about your child just throwing finance books in a corner and ignoring them, you could teach them some basic skills to get started. By now they should understand how a budget works, so encourage them to start saving.
The odds are they already have a basic bank account, but consider introducing them to a high interest savings account with a digital bank. These accounts pay significantly more interest compared to regular bricks and mortar banks.
The interest difference may seem minor, but the idea here is to show your children that their money can work for them even when it’s just sitting in a bank account.
Introduce them to investing
Don’t worry, I’m not suggesting you teach your kids to be the next investing superstar. But, I do recommend you explaining to your children what the different account types are. The two most important ones being the Registered Retirement Savings Plan (RRSP) and the tax-Free Savings Account (TFSA). They may not use either account anytime soon, but at least they would have heard about them.
Another aspect of investing you want to educate them about is that there’s no easy way to get rich quick. They may come across articles or online forums where people have made a lot of money on things such as cryptocurrency or individual stocks, but that’s essentially gambling.
There’s nothing wrong with investing in different products, but you want your children to understand that there’s always the potential to lose everything.
Tell them about your money mistakes
Sometimes, the best lessons you can teach are the money mistakes you’ve made on your own. Personally, I used an advisor that gave me bad financial advice and had me invested in products with high
The lessons you teach don’t have to be about investing. It can be something simple such as that time you didn’t shop around, and you ended up paying more than you had to.
These tips will help any student (or young adult) get their finances in order. It’s important to note that things don’t happen overnight. It’ll take time for your children to get serious about their money. Just encourage them along the way.
Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog
Money We Haveis one of Canada’s most trusted sources when it comes to money and travel. As a completely self-taught, do-it-yourself investor with no formal training, he makes money easy to understand for all Canadians. His specialties include personal finance, budget travel, millennial money, credit cards, and trending destinations.