Family Day Financial Lessons
Many people across Canada are celebrating Family Day this month – a chance to spend precious time with your loved ones and to reflect on how much they mean to you.
If you’re a parent – or a grandparent – you might want to take the opportunity to share some important financial lessons with your young ones. After all, you’ve probably learned many lessons and have valuable wisdom to share about the basics of saving and investing. Passing all that knowledge along might make a big difference to your kids’ financial well-being in the future.
Here are a few tips for getting your youngster off to a good financial start in life.
• Teach them how to save – Many parents give children an allowance, but that should also come with an understanding of the difference between saving and spending. You might want to show them how to divide their money into two pools – one for spending and the other to be put into a bank account. If children earn extra cash by babysitting, mowing lawns or doing other chores, you could offer to match whatever funds they keep out of the spending pile and in the savings account. That’ll motivate them to save more.
• Introduce them to the fun of picking stocks – Children are often fascinated by the idea of owning shares of a company. And the more they understand about stocks, the more interested they become. Consider playing a family “stock-picking” game. Everyone in the family could choose a diverse basket of 10 stocks to follow for a year. Then award a prize to the person whose stock portfolio has performed best. This is a good opportunity to teach the basics of stock analysis, by examining the factors that caused some investments to perform better than others. And don’t underestimate your children’s ability to grasp fairly sophisticated concepts. Children love to learn. You might even take the stock market game a step further and give shares – but make sure they’re quality businesses with good prospects. You also need to be aware that there could be potential tax implications to this.*
• Lead by example – Show your children how you save and invest. Explain how you saved to make a big purchase, like your car or house. And explain to them how you’re investing in their futures, such as for their post-secondary education. Stress key concepts such as setting objectives and making regular investments.
These kinds of lessons can last a lifetime, equipping your children or grandchildren with the tools they need to become smart savers and investors.
Edward Jones, Member Canadian Investor Protection Fund
* Edward Jones does not provide tax or legal advice. Review your specific situation with your tax advisor and/or legal professional for information regarding, or issues concerning, the tax implications of making a particular investment or taking any other action.