144501
149050
It's Your Money  

Money lessons for your teen

In last week’s column, I wrote about the general lack of financial literacy in our youth and the almost complete absence of teaching these skills in our school systems.

In the second of this three part series, I will discuss a few ideas you can use to help pass on these important lessons to the teenagers in your lives.    

I previously discussed the importance of creating a budget to track income and expenses and spoke about the valuable lessons that an allowance can provide. Young people these days are acting (and spending) older than their ages so consider starting this early.

For example, you might start providing an allowance at an early age and initially, you can let the child learn by trial and error. But by the time they hit age 13 (or earlier), you should consider increasing the amount they receive but also increasing what they are required to pay for.

Don’t be afraid to give your teen a larger allowance, but simultaneously require that they pay for more expenses that you would have otherwise covered for them.

For example, if they have a field trip coming up in four weeks that will require a $40 fee, increase their allowance by $10 per week, but inform them up front that they will be responsible for footing this bill.

On the day of the trip, if they haven’t saved the appropriate money, they will have to miss out this time. While it may be hard to see your child miss out on a special day, the lessons you will pass on for budgeting  awareness will pay them back tenfold in their future.

Encourage your teen to open a separate investment account as early as possible. They can earmark the funds in this account for a bigger purchase like a new mountain bike or even a car.

If possible, you might consider matching whatever funds they deposit into this longer term savings account – maybe with a clause that any matched contributions must remain in there until the big ticket item is purchased.

This will provide a strong motivator for them to save as much of their allowance and other income so that they can see the benefits of matching contributions (a lesson which will hopefully stick in their minds as adults when their employer offers an RRSP matching program).

Create a culture of charitable giving early. No matter how big or small the amount, consider dictating that a portion of each week’s allowance be set aside for some type of charity or other good cause.

Encourage your teen to research the work of a charity or other group and then make a monthly or quarterly donation to that cause.

Attempting to teach financial literacy is an intimidating and often overwhelming project but if you don’t do it, who will? It is never too early to start and if you don’t feel comfortable or capable, consider enlisting some help from a family member, friend and/or your own financial planner.

Keep an eye out for next week’s column where I will wrap up this three-part series of financial literacy for teenagers.                    



More It's Your Money articles

144791
About the Author

Brett, designated as a chartered investment manager and certified financial planner, is the regional director (Okanagan) for IG Wealth Management.

In addition to his “day job," Brett was appointed to the board of directors of FP Canada (formerly FPSC) in 2014, named as the board’s vice-chair in 2017 and will take over as board chairman in June. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations for the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FP Canada board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected].



148345
The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories