The most influential teacher your young child will ever have is you – their parent, especially Mom.
Your children are considerably affected by how you use money on a day-to-day basis. Kids are watching and listening to you all the time, and they learn a lot through their observations.
Your children’s future habits are being shaped right now. Be careful to set a good example.
Starting early
It’s never too early to start teaching kids the value of money. As soon as they are able to count let them handle different coins and bills and learn to identify their values. Show your child how many coins of certain values it takes to equal another coin or bill.
Look for teachable moments – when going shopping, for instance. Explain where money comes from, how it is used and that different items have different values. Help your children to understand that people have to work hard to earn their money and have a limited amount to spend.
Provide an allowance
Giving your child an allowance can be a good way to teach basic money management skills. You could start giving an allowance at about age 5.
Opinions differ on whether or not allowance should be tied to household chores or used mainly as a teaching tool. If it is linked to chores, be clear about what they are doing for pay and what is expected as simply being part of the family. Either way, do offer kids a chance to earn extra income for doing infrequent household tasks such as washing windows or vacuuming the car.
Decide on an appropriate amount that you can afford, and keep it consistent. Pick a day of the week for “payday.” You can also use this day to have a discussion about what they plan to buy and how their savings are coming along.
Help them divide their allowance, or other money they receive, into categories such as saving, giving, and spending. Use cash and split it up into bills and coins to make it easier to place the money into each jar or piggybank.
- Spending
Let them make their own choices – and make their own mistakes. This is very hard for parents to do. Don’t micromanage their money for them. Young children can be very susceptible to advertising, but they will soon learn when a toy is not as good as what the commercial has promised. They will learn a lot from the purchases they regret. You just need to be patient and supportive.
- Saving
Give your child a piggy bank. Take your elementary school age child to the bank and open a savings account in his or her own name. Most financial institutions offer no-fee accounts for children. Encourage them to regularly deposit money they receive from allowances or gifts.
- Gifting
Teaching your kids about giving to others is a valuable concept for them to learn. Help them to identify ways they can use their money to help others and make a difference.
Goal setting
It’s never too early to start thinking about what’s important to you and how you will get there. Teach them that there are choices when it comes to money and that spending on one thing means there is less available for something else.
Connect the money to a specific purpose to motivate your child towards saving for something they really want, such as a toy or special activity.
For young children encourage them to save for something they can reach relatively quickly. If they don’t see results they will lose enthusiasm.
Young children can decorate and label separate jars (or other containers) for each of their goals.
Conclusion
Learning how to manage money is a life skill. Like most behavioural skills, it’s much easier to teach a toddler or preschooler than a teenager.
If you start teaching your children about money when they’re young, they will learn how to make good decisions about spending, saving for the future, and how to practice good financial habits that will last a lifetime.
Where did you learn about money? From your parents? At school? From the school of hard knocks?
What’s your best tip for teaching young kids about money?
A new wave of financial companies is turning traditional banking on its head by leveraging technology to offer customers low-cost banking, lending, and investing solutions.
At the forefront of the fintech revolution are three online lending companies that are carving out a niche by targeting borrowers who want instant loan approval without visiting a branch. Loans are often funded within a day or two at interest rates that are lower than you’d find with a typical credit card.
Here’s a look at what online lenders Borrowell, Grow, and Mogo have to offer:
Borrowell
Founded in 2014, Borrowell has provided free credit scores and loan quotes to tens of thousands of Canadians.
Offer three- and five-year loans of between $1,000 and $35,000. Loans are fully amortizing, which means they have the same monthly payment every month; at the end, the loan is fully paid off, similar to a mortgage.
Some customers choose to pay back early, which they can do at any time without penalty.
Interest rates start at 5.6 percent. A typical borrower would pay about 11 percent.
An application form takes about a minute to fill out, so you can find out instantly if you qualify, how much you qualify for and what your interest rate would be. If you proceed, your funds are typically deposited into your account within a day or so.
Loan offers include an interest rate and an origination fee.
Borrowell is the only company in Canada offering credit scores for free without applying for credit. You’ll get your Equifax credit score for free.
Grow
Founded in 2014 and formerly known as Grouplend, Grow has customers in the multiple thousands.
It offers loans from $1,000 to $30,000 for a maximum of five-year terms. There are no constraints around fixed yearly terms, so if the best loan for you means paying $300 per month for 38 months then Grow can offer that term.
Many borrowers pay off their loans off ahead of schedule, with the average loan term being just over 51 months.
Interest rates are between 4.8 percent and 18.9 percent. A typical borrower would pay about 10.2 percent.
The initial quote triggers an instant decision and approximately 60 percent of borrowers are funded on the same day. The remaining 40 percent are funded the next day.
There are no fees associated with personal loans.
Grow also offers RateTracker – a free service that monitors your personal credit metrics and sends you an updated personalized interest rate every month.
Mogo
Founded over 10 years ago, Mogo has more than 200,000 members and more than 1 million loans originated.
Mogo is considered a full-spectrum lender and offers loans up to $35,000 at interest rates as low as 5.9 percent to consumers with good credit scores, as well as loans to consumers with poor credit whom other lenders would typically turn down.
The average time for borrowers to pay back a loan is three years.
Interest rates vary depending on the credit product for which the customer is approved. The average rate for a customer with the same credit score would be similar to other online lenders.
MogoLiquid personal loan rates range from 5.9 percent to 45.9 percent.
It takes three minutes to sign up and get pre-approved for credit as well as the other benefits with no impact to your credit score (through a soft credit check). The pre-approval decision on credit is instant once the application has been filled out. Funding can be as fast as the same day, but typically happens the next business day.
Borrowers can purchase optional loan protection. Loan customers get a free quarterly credit score update, plus tips on how to improve their credit score.
Mogo also offers a “level up” program that enables its customers to work towards a lower rate simply by making payments on time and improving your credit history.
The verdict:
Online lenders are primarily targeting the millions of Canadians that are carrying high-interest consumer debt such as credit card debt, consumer finance loans, and even payday loans.
Related: Debt avalanche vs. Debt snowball
It won’t impact your credit score to get a personalized quote online at any of the three online lenders. That’s because Borrowell, Grow, and Mogo all do what is called a “soft inquiry” into your credit report to determine your interest rate.
If you’re mired in high-interest debt and looking to dig your way out and save on interest charges, you’d be smart to check out an online lender and get a personalized quote.
I’m on holidays for the rest of the month and we’re heading out to Kelowna, B.C. to spend our family summer vacation water-sliding and wine-touring in the Okanagan.
For the fifth summer in a row we’ve rented a house through vacation rental site VRBO.com. We can find an entire house or condo to rent for about the price of a nice hotel room. We like having our own place with a kitchen and separate bedrooms for the kids. We cook our own meals, for the most part, and mix our own drinks instead of paying for overpriced hotel food and cocktails. It’s nice to have a home-base from which to make day trips. Then we simply tidy up before we leave and head home.
I can see why owning a vacation home appeals to some, but for us that’s money tied up in a place we won’t use often, not to mention the extra maintenance and care that comes with owning another property. By renting a house on VRBO (or Airbnb, if that’s your thing) we save money and have the flexibility to try new places and destinations every year.
This week’s recap:
On Monday I wrote an open letter to Air Miles urging the company to allow its collectors to make a one-time transfer from Air Miles Dream to Air Miles Cash before their miles expire.
On Wednesday Marie listed five rules of thumb that could use an update.
And on Friday the long-awaited final implementation of CRM2 came into effect and I explained what the new disclosure rules mean for Canadian investors.
Weekend reading:
Frustrated Air Miles customers are responding to media reports about their reward miles expiring but they’re having trouble connecting to the company’s website or reaching customer service reps by phone.
If you’re looking to find a better credit card, perhaps to switch from an Air Miles rewards card to something different, check out Stephen Weyman’s guide to Canada’s best credit cards.
Andrew Coyne shares an interesting take on expanding CPP by turning the program into 18 million RRSPs.
Here are five things you need to know about the new Canada Child Benefit, which should arrive in your account next week.
Wondering what to do with your Canada Child Benefit once it hits your account? Jamie Golombek offers some suggestions.
A new study points to a rise in the number of low-wage earners with graduate degrees.
Pokemon Go is all the rage right now and Des from the Half Banked blog weighs-in on people “leisure-time shaming”. I agree that every deserves their downtime and should spend it doing whatever they enjoy.
Rob Carrick says it’s time for Canadians to get over their hang-ups about paying for financial advice.
New disclosure rules in the investment industry offer big opportunities for robo-advisors. I agree.
Here are 11 signs your financial advisor is robbing you blind (and how to stop it).
Why Canada is the only major market in the world without a super-cheap airline.
One in five Canadians plan to sell property to help pay for their retirement. I’ll be honest, I expected that number to be higher.
Here’s a good primer for Millennials on tax free savings accounts:
Take a simple idea and take it seriously. Morgan Housel comments on why basic beats flashy.
Herbalife has made claims that people who participate in the company can “quit your job,” “be set for life,” “earn millions of dollars,” “make more money than they ever have imagined or thought possible,” “realize unlimited income,” or similar representations. Now the company has agreed to restructure its business model and pay $200 million to consumers who purchased large quantities of its products and lost money.
A former hedge-fund manager says Vancouver’s real estate is fuelled by ‘a money-laundering bubble’.
Michael James muses about home-buying dreams and says that Millennials could end up renting longer than his generation did due to high house prices.
The Smith Manoeuvre is way for Canadians to make their mortgage tax deductible by borrowing the equity in their home and using the funds to invest. Since investment loans are tax deductible if used for the purpose of earning income, the borrower has effectively turned his or her mortgage into a tax-deductible investment loan. Frugal Trader from Million Dollar Journey has used this strategy for many years and answers some questions about this leveraged-investing scheme.
Dan Bortolotti and Justin Bender are back with the long-awaited second edition to their popular white paper, Foreign Withholding Taxes: How to estimate the hidden tax drag on US and international equity ETFs.
A cool story from the founder of LowestRates.ca on why start-ups should focus on making money instead of raising capital.
Another video by Preet Banerjee, this is a must-watch and explains how to know if a 0% car loan is too good to be true:
Jon Chevreau offers six ways to extend the life of your retirement nest egg.
Finally, Tim Cestnick argues that life insurance isn’t taboo – it’s a tool that can be used in many creative ways to preserve wealth and save taxes.
Have a great weekend, everyone!