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Summer school: teach your children about finances

Summer school: teach your children about finances

June 28, 2012

Children should know more about the fundamentals of personal finance.
Children should know more about the fundamentals of personal finance.

This summer enroll your children or grandchildren in a home learning summer school program about finances and you assume the teacher’s role.

For years parents have suggested schools should do more to educate the next generation about personal finances. You do not need to wait for this to happen.

From a learning perspective, it does not matter whether this occurs in the classroom or around the kitchen table. Children should know more about the fundamentals of personal finance.

Parents might not feel confident with their own financial literacy to be able to teach. If that is the case there is another option.

If you are not able to be the teacher, be the facilitator instead. Let your child teach you. Even if you are an expert with financial issues, they will likely learn more on their own.

For example, your child should learn about budgeting. Their lesson could be to tell you what a budget is and give an example of how they might budget if they received an allowance or if they have a job.

Suggest they go online to find a definition of the term “budget”. Then allow their imagination to create ways they could manage their spending over the course of one month.

The next assignment is to have your child give examples of how a family with two young children would budget. Encourage them to consider short-term requirements like buying groceries.

Then they should consider spending that might be done yearly like home maintenance or a vacation. Finally, ask your child to comment on how parents will be able to assist their children with the cost of a university education which is still many years away.

Will there be questions? Hopefully there will be many questions. The best learning will happen when there are more questions than answers.

Your summer school strategy is to encourage your child to be curious and to think about personal finance issues. Teach them how to think about budgeting and how it applies to both children and adults.

A simple conversation about budgeting will hopefully lead to other important topics such as saving, spending and investing. With that new knowledge move on and teach them about the three stages of life.

Ask them to estimate their range of age as a student, worker and finally someone who is retired.

This conversation could stay focused on finances. Perhaps it will become a career discussion. Or better still it will evolve into the realization that the ultimate goal is to have financial self-sufficiency where the role of education is to prepare for decades to come in a financially and intellectually rewarding career.

The final part of summer learning will be to draw a parallel between the budgeting and spending habits of a ten year old and a young family to that of organizations.

All organizations face the reality and responsibility of financial management. Ask your child to talk about some organizations that need to earn income or receive cash flow, manage expenses and plan their finances.

This could include their sports team, schools, the company you work for or the Canadian federal government. That conversation could go in several directions.

A sports team receives donations. Schools receive money from the government. Your company sells a product or service; therefore, income comes from customers’ sales. The federal government taxes people and corporations.

Our recommendation this summer is to spend time helping your children understand and manage their personal finances. This knowledge will help them for their entire life.