As parents, we strive to provide our children with the best education, experiences and opportunities. But there's one crucial lesson that can get overlooked: financial literacy. Just like reading, writing and math, understanding money is an essential life skill. In this article, we'll share advice for teaching your kids to be financially savvy, setting them up for a prosperous future.

Explore the basics of earning and saving

Let's start with the basics. Earning and saving money should be a fundamental part of your child's upbringing. Introducing an earning-based allowance not only teaches them the value of hard work but also the joy of earning their rewards.

Here's an example. Your child really wants you to buy them a video game; however, instead of buying it immediately for them, you can use this as a teaching opportunity. Help them save their allowance over several weeks or months, offering to pay them if they complete additional chores. Once they've saved enough money for the new game, set aside some time to take them to the store to purchase it, or order it online. The act of saving teaches patience and delayed gratification, a valuable skill that's learned over time.

And while they're learning to save, why not open a bank account for them? Our Youth Plan offers a free and tailored solution to kickstart their financial journey. Here's a helpful tip: if you're like most busy parents, you've likely forgotten to take out cash to pay allowance from time to time (ugh!). Once your child has their own bank account, you can have their allowance payment automatically transferred from your account to theirs (yes!). This is also a great opportunity to teach your child to use a debit card responsibly. Speaking of spending . . .

Practice spending wisely

Becoming a sensible spender is about more than just getting the best deals, it's about making informed decisions and living within your means.

Explain the different between needs versus wants – a skill that will serve them well throughout their lives. Talk to your children about the monthly costs of your family's basic needs such as food, shelter and clothing. If your children are encouraged to pay for their 'wanted' items with their allowance, they'll learn the value of their money and how to make wise choices.

Introducing them to the concept of budgeting will empower them to manage their money effectively. For younger kids you can use the jar method, splitting their physical allowance between save, spend and share. For older kids, you can find simple budget plans online to print off or download a budgeting app to track monthly income and expenses.

Explain the risks and rewards of borrowing

Getting a credit card can be both exciting and intimidating. Encourage your older teen to get a credit card before they leave home, so they can learn responsible credit usage. Credit cards are great for building their credit history, tracking expenses and having just in case of an emergency. Learn more about the benefits of getting your first credit card – we'll even touch on the rewards you can earn!

Servus offers many types of credit cards, including no fee and student cards that are great for young people learning to use credit carefully. Explain how paying off the monthly balance in full avoids costly debt accumulation. Remember to underline the significance of building a strong credit history – it's the key to unlocking future opportunities. Being open and honest about some of your credit card habits and mishaps can help your kids stay on track. If you need a little help in this department, check out our Credit 101 blog.

Encourage the heart and smart benefits of charitable giving

When your kids were young you taught them to share their toys. As they get older and start earning an allowance, teach them to set aside some of their earnings to support a worthy cause. Whether it's supporting environmental initiatives, aiding the less fortunate, or championing animal rights, giving back to a cause important to them is a life-enriching experience.

Explain that charitable giving also comes with financial benefits. Donations can be claimed on income tax returns, reducing their taxable income – a win-win for their hearts and their wallets.

Give them a head start with a Registered Education Savings Plan (RESP)

Post-secondary education is a significant investment, but it doesn't have to be a financial burden. The average cost of tuition in Canada continues to rise ($6,693 in 2021/22), making it essential to plan ahead.

Consider starting a RESP account as early as possible. Every contribution counts, and the Canada Education Savings Grant offered by the Government of Canada is an opportunity you don't want to miss. You can receive up to 20% per year in matching funds, up to a lifetime maximum of $7,200. If invested wisely, this money can quickly become a great nest egg to start your child's post-secondary education. Free money? That's more like it!

When it comes to raising financially-savvy kids, one of the best things you can do is talk about money. Not just once in a blue moon, but all the time.

Instilling healthy saving, spending, borrowing, and giving habits will equip your kids with a solid financial foundation and help them feel good about their money. And when you're ready to open a savings account, start a RESP, or help your teen set a budget for college . . . we're here to support you every step of the way.

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