by Jon Lambe
In the coming years and decades, it’s estimated that approximately $400 billion will be passed down to inheritors in Canada. It’s a powerful statistic that carries with it many underlying questions and considerations for both the giving and the receiving generations, a common one of which being whether inheritors are prepared. With this historical wealth transfer on the horizon, and considering its significant impact on individuals and families, taking proactive steps to strengthen and ensure younger generations have the resources and tools needed to be confident and capable in becoming financially independent is all-important.
When it comes to financial education, it’s never too late or too early to start. Below are a few key considerations for your child’s financial understanding, based on their age.
Ages 6 to 13
Instilling a sense of money with your child begins with:
- Establishing chores to encourage responsibility and a strong work ethic.
- How to make the most of their allowance based on the save vs spend concept.
- Budgeting and saving strategies for the something special purchases (bike or video game).
Ages 14 to 17
During the early teenage years, it’s important to:
- Continue with allowance and increase based on growing responsibility.
- Build on budgeting and savings strategies.
- Starting to invest savings and different savings options.
- Begin to discuss the use of credit and using credit responsibly.
- Introduce the concept of compound interest.
- Educate your child on the role interest plays on their savings plans as well as credit.
Ages 18 to 23
Your young adult’s, intermediate financial education should include knowledge of:
- Savings/Investment options such as stocks, mutual funds, GICs.
- Importance and risks of credit.
- Importance of compounding interest and benefit of time.
To continue your young adult’s financial knowledge, you can educate them by:
- Opening them an investment account to teach about safety, income, and growth of different investment options.
- Suggesting setting up an automated monthly savings contribution (to reinforce the compound interest concept).
- Comparing monthly spending vs budget to help understand wants vs needs.
