Basic finance rules for children are still being taught to adults who can’t manage their money.
The other day our son came into the kitchen and asked us for our credit card number.
He needed our credit card to put money into a game on his tablet so he could keep playing.
Let that sink in.
You Have To Understand Money Before You Use It
The best budgeting rule is to understand money before you use it. Makes sense right?
Year after year we find that we have to include money management as part of every day life.
It’s not something you teach a child when they are 4 or 5 and move on to the next subject.
Our son is coming up for 7 years old and just starting to learn about money in grade 1.
Oddly enough, I realized that I still struggled with Canadian coins while helping him with online schooling.
But why? I’m a finance blogger in Canada who is debt-free and didn’t know what a nickel was.
I know the worth of coins in Canada but often forget the proper names.
Don’t laugh, this is the reality of how debit and credit cards have been taking over cash money.
On our way to McDonald’s to buy our son a cone after his therapy session I realized that I had left my wallet at home.
I scrambled in the truck to see if I had any coins to cover the costs of his ice-cream order.
Thankfully I did as I’m a cup holder coin holder type of guy.
It was at that moment the realization about how little Canadian money we carry came over us.
No wonder our children are struggling with basic finance rules because all they see is plastic.
Credit Cards offer rewards points, discounts and deals where using cash does not.
Marketing Is A Big Part Of The Problem
Let’s face it, marketing is money motivated and will never go away.
So what do we need to do?
Understand what marketing is and how it affects our wallet and teach our children the same.
Marketing is alive to entertain and persuade consumers to try something new or improved.
When we give in we either feel we’ve spent money wisely or were taken for a ride.
I’m no different from anyone else and have experienced both the good and bad of marketing.
Teaching Basic Finance Rules To Children
Our son suffers from sensory processing disorder and possibly Autism.
Currently we don’t have a final diagnosis as he is going through Canadian Mental Health testing.
On that note we’ve been working hard to ensure he understands the basics of life but at a slower pace.
We allow him to play video games that are educational as well as entertaining online as part of his structured day.
He also reads exceptionally well for his age, loves to play sports and learn about the human body. (He has a thing about wanting to explore surgery and autopsies.)
When marketing gets in the way is when things start to go downhill.
This could be at the grocery store, mall, internet, newspaper, magazines, children’s books etc.
It’s no secret that everything put in front of children and adults comes with a price tag.
As humans we are conditioned to spend money far more than we are to save it.
Nothing is ever free and if it is the freebie is only for a limited time or edible, ex Costco Food Samples.
Even then the freebie is meant to persuade you to buy the product you just sampled.
There’s always going to be front door and backdoor marketing for one product or another.
Front door meaning it’s in your face and back door meaning subliminal where you question it.
There’s no blanket for marketing just education to make informed decisions.
Basic Finance Rules For Elementary Students
The way consumers pay for purchases today is nothing like what I grew up to understand.
When children believe they need to spend money to entertain themselves it becomes a problem.
I don’t recall being taught about money throughout my school years however I wish it had been.
If you want your child to understand money you will have to do your part to educate yourself first.
Even if you feel that you shouldn’t have to at least teach them a few basic finance rules.
- What each coin and bill is worth
- Basics of how debit and credit cards work
- Working to earn money
- What is a bank?
- Importance of a good education
- Allowing them to pay for purchases using cash
- Wants vs Needs
- How to save money
These are are what we’ve explored over the years with credit cards being our new adventure.
Basic Finance Rules We Teach Our Son
Everyone parents differently and for you it might not be a priority as it is for us.
We’ve hear it all when it comes to teaching children about money.
As you can see below not all parents believe in basic finance rules for their children.
I believe they are fair reasons however remember that money doesn’t mean the same thing to everyone.
- Kids don’t need to learn about money so young.
- Why put pressure and stress about money on a child?
- They won’t remember it anyway so why bother?
Over the last almost 7 years we’ve given our son a head start with basic finance rules.
What we failed to explore was credit cards which is why I feel it should be part of basic finance rules.
Why? That’s what they see more than they do cash and who knows if cash disappears one day.
We feel that allowing our son to make informed financial decisions into adulthood begins at home.
Below are a few basic finance rules that we’ve explored to kick-start his money management mindset.
Teaching Kids About Canadian Money
In school he is currently learning about Canadian coins which include names and worth.
I’ve made up a Canadian coin chart with a nickel, dime, quarter, Loonie, Toonie and penny.
Pennies are no longer in circulation but taught for math purposes as well as rounding of money.
By allowing him to see the coins visually it enables him to put two and two together.
He is also learning about skip counting using coins which allows him to develop what money is worth.
This has been an ongoing process but one of the most important because you have to understand money before you can do anything else with it.
It also helps everything else we teach him fall into place.
Opening A Savings Bank Account
Saving money for kids can either be done in a piggy bank or a bank account both of which we use.
We opened a Simplii savings account for our son years ago and continue to build and invest the money.
We have been with Simplii Financial for almost 20 years without any issues.
What we love the most is that they are a no-fee bank and they accepted me when I first moved to Canada.
It’s one of the best banks in Canada that do not have a brick-and-mortar bank.
Everything is done online or on the Simplii Financial App which we also use.
Join Simplii Financial today! No monthly fees. Great rates. As simple as that.
At times he asks about how much money he has in the bank and we show him.
Although he doesn’t understand investing yet we do tell him we are putting his money to work.
He has a non-registered investment account that we opened a few years ago and transfer money into.
We’re hoping one day he will appreciate what we’ve done for him but for now we keep it simple.
Earn money, Save money and the Invest money will come later.
Spending Money and Saving Money For Kids
As mentioned we realized that we weren’t using cash as much as our credit card for purchases.
Over the years we have had our son pay for purchases at the mall or corner store with cash.
Not only did he feel proud but he learned that you need money to buy something.
What we’ve noticed lately is the shift from cash to credit card payments.
When he asked us for our credit card number both of us were in shock but not surprised.
Credit cards and mobile apps are the sign of the times and there’s no baking down.
We explained to him what a credit card was and that’s it’s not free money.
When it comes to basic finance rules for children you don’t need to get into specific details.
Just take your time building financial education with your child over the years.
This year may be about coins and next year bills and so on.
Don’t stress over it because you’re doing what every parent should do and that’s educate.
Buying Used Vs. New
The new vs. new topic has come up several times in conversation with our son over the years.
We shop at thrift stores, garage sales, online buying from Kijiji and Facebook marketplace.
He knows that his mom will sell his toys if he no longer wants to use them and he understands.
The money we make goes into his savings jar which he enjoys watching fill up.
We’ve explained to him that there are certain things we can buy used or even new for less money.
By doing so then he doesn’t have to spend more money from his jar and can save it.
There’s never been a time where he’s had a tantrum or has been upset about not buying something.
On the other hand he’s the first one to point out the “Free Stuff” sign in front of people’s houses.
He loves the thrill of looking to see if there is anything that he can use.
Last year he brought home a bike that was a bit too big for him as it had a free sign on it.
It turns out all that it needed was a $20 derailleur part and the $500 bike was ready to roll.
Garage sales are another great place to bring kids to educate them about new vs. used and savings.
Allowance For Kids
We started teaching our son about chores and the importance of home ownership.
Since we give ourselves a monthly allowance we decided our son deserves one too.
Sounds daft, however he watches me cut the grass, take out the trash and make repairs around the house.
I’ve told him that one day this will be your chore and when the day came he was thrilled to take the garbage to the curb.
Every Wednesday he goes outside with me and we get the bins ready and he rolls them out.
We give him a $5 weekly allowance if he participates in chores around the house.
Trust me, he loves money just as much as we do since he’s never late for work. Ha!
Starting young and building on experiences is nothing short of an excellent beginning to life.
Basic Finance Rules of Education
I don’t know how many times our son has asked us if he has school in the morning.
The answer is always Yes because an education is important so you can get a good job making money.
Career choices for children may seem odd but many do go on to work in what captured their heart as a child.
That wasn’t so much the case for me but I knew that I had to get good marks and study.
Although he’s still young talking about why mom or dad has to go to work is an important money lesson.
If you need something it costs money and parents work for money to ensure they can buy what they need.
Teach Money Slowly But Continuously
Overall, I feel we are doing a decent job as parents teaching our son basic finance rules.
One important tip that I can offer any parents who aren’t sure about money is to budget.
If you budget your money and include finance in your everyday routine it will make teaching it easier.
Using our 10 Step Budgeting Mini Series is a great tool that will help educate you about budgets.
I’ve also included a sample budget so you can see what it looks like for inspiration.
On that note, I’d love to hear about how you teach your child basic financial rules year after year.
Leave me your comments below.
You can also find more Canadian resources to help your journey of teaching children about money at Canada.ca.