Family Finance

Reading, writing and saving money

If you’ve got kids, September can be a super-expensive and stressful month. Back-to-school means dishing out money for new clothes, supplies, uniforms, activities, music lessons, and possibly tutors. It means the morning rush, packing lunches, chauffeuring, extracurricular activities, and doing it all over again the next day.

Parents today are used to doing it all. But doing everything for them means your kids are missing out on some valuable lessons, whether it’s managing family chores or managing money. While you don’t want your kids to feel deprived, it’s essential they learn the difference between “needs” and “wants” early.

Use back-to-school time to teach your kids about money. Younger children can learn by helping to choose between snacks, toys, and other small items. You can start teaching older children about money by including them in discussions about family finances. Use their education fund, your mortgage statement and bills to explain how they fit into the family’s financial plan.

In a guide published by Mackenzie, ’til you’re blue in the face, you can find valuable suggestions on using money to teach about money. They include:

• Saving before spending is the key to financial success. Reinforce this by opening a bank account with them, and match and deposit any money they save from their allowances.
• If you provide lunch money, give your kids enough for the week, but teach them how to save by making it clear it must last. If they run out, let them brown-bag it.
• Help them prioritize by finding out on Sunday what activities they have planned for the week. Cover what you think is necessary, but no more.
• If you agree to purchase a big-ticket item like a snowboard, do so only if your kids agree to save money from their allowances to put toward it.

If you have teenagers who work part-time, here’s what you can do to help them start managing their money:

1. Discuss budgeting and show them how they can spend today and still set something aside for the future.
2. Teach them to pay themselves first by saving 10% from each cheque and investing it in a mutual fund inside an RRSP.
3. Encourage them to save another portion for college or a trip to Europe after high school.
4. Show your teens how many hours they had to work to buy a specific item like an MP3 player. This helps them avoid the temptation to spend every cent they earn.
5. Invite your financial advisor to discuss investing with your teens and how a little money saved from their job today can grow powerfully over the years.

Check out the guide here.

You can also learn more about managing your own spending by visiting Mackenzie’s Burn Rate site at www.burnrate.ca.