(NC)-In the days before television, children could receive a dime and be reminded not to spend it all in one place – and parents could believe they were teaching their children about money. But it’s a different world now with marketing messages targeting ever-younger children. It’s been estimated that children aged eight to 13 are exposed to some 40,000 commercials every year.
“While parents can’t single-handedly wipe out mass marketing to children, they do have a powerful tool at their disposal: education,” says Patricia Lovett-Reid, senior vice president, TD Waterhouse Canada Inc. “Attempts to educate kids about money will be more successful if they’re fun, interactive and tied to age-appropriate goals.”
One guideline is to start teaching children about money as soon as they begin asking about it. A child as young as five may be ready to start earning an allowance, a great hands-on way to start learning. An idea for kids this age is to have them divide their allowance into three labeled jars according to the values parents are trying to impart – for example, one jar for spending, one for saving, and possibly a third for sharing.
Children become more avid consumers as they move through grade school so by the time they are seven or eight, parents may consider starting bank accounts for them. TD Canada Trust offers no-fee savings accounts for children. A passbook is seen as serious business to a child, and regular trips to the bank to update it may get them excited about saving more and watching their savings grow.
As children enter their ‘tweens, they may be interested in saving more seriously for larger purchases. Parents should teach older kids what they themselves have learned from experience: the importance of starting early when it comes to saving and investing, as well as the concept of paying yourself first.
Older children and teenagers should learn about opening chequing accounts and registered Retirement Savings Plans (RSPs) and be taught how compounding and dollar-cost averaging work. Many online calculators exist that will do the math, so it just takes a moment to see the results that different saving strategies produce. A regular monthly contribution to an RSP mutual fund can be set up at a TD Canada Trust branch for as little as $25 a month, offering an accessible way for kids to learn about saving for the future.
“Remember, the best way to teach kids of all ages is to lead by example. Strive to be a good role model and teach your kids what you learned through trial and error,” says Lovett-Reid.
Credit: www.newscanada.com