Talking about money and finances has always been an open discussion at our house but has lately become the topic of urgency, because our oldest child is graduating from Grade 12 and starting University in the fall. She’s been accepted to UBC and we’re about to enter the world of the Registered Education Savings Plan (RESP) and accessing those funds we’ve been saving for years now.
Today, the third Wednesday of April, has been designated as Talk with Our Kids About Money Day. Although it seems kind of early (we are Kindergarten teachers, after all) to be talking about money, we know it’s really important to start forming good habits and a healthy perspective about money at a very young age. Canada’s Task Force on Financial Literacy views that the improvement of financial literacy among young people should be a shared responsibility, a lifelong process and provided for in public schools. While Christy and I do not concur exactly with that perspective, we do think that some basic knowledge (attributes of coins and financial role-playing are part of the BC Kindergarten math content), financial “theory” (saving some money every month is important and necessary) and the application of money skills (bake sales) can be taught at school. However, our belief is that the actual teaching of financial literacy is the role and responsibility of parents because money reflects our personal and family values and morals, and is influenced by our cultural heritage.
So we were very fortunate indeed to hear Canadian financial maven, Gail Vaz-Oxlade, speak to parents at the Kay Meek Theatre in West Vancouver last May. Gail was invited to speak to the students at our three high schools and she also gave a separate parent session. Although Gail’s presentation was geared for parents of older students, her expertise and savvy in understanding and using money is applicable for all ages. Gail gave our audience some tough love; she asked sobering questions and made us reflect on our own financial literacy and money habits. With her usual wit and wisdom, here are some of the highlights from her talk.
“It’s our job as parents to teach financial literacy.”
This was probably the most important idea that we took away with us that evening. Gail does not believe that financial literacy should be part of the school curriculum: Teachers cannot give kids the money to create the real-life learning situations. Rather, it’s the parents who can give their kids the money and take it away. As parents, we need to learn, know and help our children smooth the rough edges of their money personality, whether it be hoarder, spender, or impulse purchaser.
Gail emphasised how as parents we need to take every opportunity of our lives to teach our children about money. Parents often want financial literacy in the school system because they are uncomfortable talking about it. But she reminded us that as the parents, you are your children’s best teachers: you taught them how to walk, how to use the toilet and how to talk. You can use each and every day to talk about money related situations.
“Love your children enough to let them learn the lessons properly.”
As our children are learning their lessons about money, our response to them is important. Sometimes, as a society we want to label children and teenagers these days as being entitled. But Gail suggests it’s not things, or stuff, that spoils kids. We spoil them by not having expectations. We need to clearly state our expectations to our children, what we will, and will not put up with, and allow the natural consequences of poor decision-making to happen, especially those decisions related to money. As parents, we want to be our kids’ saviours, saving them over and over again. But, our children have the right to make their own mistakes and to fix them. Kids only learn to spot mistakes after they have experienced making them.
So, how do you teach kids about money?
Gail recommends that children receive allowances–to put the money you would normally spend on them in their hands. Then, set expectations about what they will do with it. We can teach our children how we accumulate money for planned spending for predictable necessities in our lives such as car or house insurance. What kind of spending do your children need to plan for?
Some of you may be familiar with the “money jars” for spending, saving and sharing that Gail has discussed in her books and on her television show, “Til Debt Do Us Part.” Because money is an abstract concept, putting it into the jars makes it concrete. For more information about kids, allowances and the “money jars,” click here.
Children must learn to differentiate between “needs” and “wants.” As parents, we must use this vocabulary correctly and consistently. Do we always understand ourselves what we mean by needs and wants? Because language influences how we think about things and the way we spend our money.
“Financial literacy is what you do to move from being dependent to independent.”
We love Gail’s definition of financial literacy. She said that “being independent is the healthiest you will ever be.” Why would we then, as parents, not teach our children the financial skills they need so that they can begin the journey to independence?
Gail cautioned us about keeping secrets about money from our children. We need to teach our children about setting goals, planned spending, emergency funds, how interest and credit works, saving for the long term and bank fees, loans and mortgages, none of which should be a secret. Let’s talk openly with our children–we’re their parents! Let’s give them the benefit of our life experiences and teach them about financial literacy while they are young, so that one day they can be informed, knowledgeable, independent young adults making their way in the world.
Thank you so very much to Gail Vaz-Oxlade for continuing to inspire us!
We would also like to thank our Ridgeview colleague, Leanne Pruner, for suggesting these resources for you to consider when talking to your kids about money.
Save, spend, share, invest: How to talk with small kids about money
Money Smart Kid$: Teach Your Children Financial Confidence and Control by Gail Vaz-Oxlade