Food for thought – today’s teens will eventually become the adults responsible for the success of our economy. So, do you want adults in those positions who cross their fingers and hope they have it right, or people who have developed superior financial literacy skills over their lifetime?
Canada’s Task Force on Financial Literacy defines financial literacy as “having the knowledge, skills and confidence to make responsible financial decisions.” But financial literacy isn’t just a vital skill for a person to have for their own financial well-being and future, it can also have broader economic implications because poor financial knowledge and decision-making ultimately affects the national economy as well.
I bet I’ve caught your attention, especially if you’re the parent of a teen or young adult.
A 2015 study by the Organization for Economic Co-operation and Development (OECD) and Program for International Student Assessment included the financial literacy performance of Canadian 15-year-olds. The good news is that globally, Canada is one of the top-performing countries in financial literacy where 21.8% of Canadian students performed tasks at Level 5 or above in financial literacy, while the global average is 11.8%. (And as a woman, I am pleased to report that the study found no difference between boys and girls in average financial literacy scores in Canada.) But there is still work to be done.
There were four other key findings as well:
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Most 15-year-olds save money regularly, which is a positive sign they have started to develop saving habits that will serve them well in the future.
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If they do not have enough money to buy something they really want, most students save up to buy it – a sign they have the intention to manage their money wisely.
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Over 70% of students have a bank account, which is related to higher financial literacy scores.
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Discussing money matters with parents is also associated with higher financial literacy.
So, here’s what you can do as a parent to help your child acquire the financial literacy skills they need for financial empowered life:
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Encourage your teen(s) to see money in the bigger picture. Discuss saving, investing, etc. Show them statements from their RESP and explain how the plan has increased in value.
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Encourage them to balance what they want today with what they will need tomorrow.
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Show them how many hours they had to work to buy a specific item.
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It’s never too soon to have a budget. If you start them off early, budgeting will become second nature to your teen instead of something they fear. And budgeting can help them spend responsibly today and still have money for the future.
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You can use money to teach about money. If you provide your teen with an allowance, you need to discuss what your expectations are regarding what the funds are to cover. Also be clear on how long the money has to last them. This helps them gain experience with managing their own money.
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You gotta walk the walk, not just talk the talk. Realize that your kids learn from you through direct instruction, as well as through what they observe.
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Students who discussed money matters with their parents once or twice a week scored the highest in financial literacy, so talk openly and regularly about money and budgeting with your teens. It pays every single time.
At Credit Canada, not only do we provide free one-on-one money management and credit counselling, we also provide free money management workshops and seminars to schools and community groups, such as Money 101. If you’re interested in having one at your community group or school, contact our Education Department at 416-228-3328 ext. 8022 and they will be happy to set that up. You could also attend one of our free Money Management and Financial Planning seminars we host once a month at our head office. The next one is scheduled for October 19th. If you’d like to attend just call 416-228-3328 ext. 8022 to register. Also visit www.creditcanada.com for all your budgeting needs.
FREE MONEY!!!
If you have a teen in Grade 12 or you know someone who is, we are hosting a Grade 12 essay contest in celebration of Credit Education Week Canada (CEWC) 2017. Winners will receive scholarships towards their post secondary education, with a top prize of $5,000. All you have to do is tell us, What was the dumbest thing you've ever done with your money and what did you learn from it? There are over 20 prizes to be won! Click here for full contest details. Contest ends October 16th, so get those entries in!
