Finding different ways to save for your kid’s post-secondary education
Money is still considered by many to be a taboo topic or private matter, which is why many people avoid sparking up conversations about their personal finances with friends, colleagues and even family.
Yet, when it comes to your kids, keeping quiet about money might actually cause more harm than good.
Experts say that parents should start talking to their kids about money from an early age as it will help them develop a healthy relationship with their own finances one day.
“Handling money is a life skill just like cooking is a life skill,” said Liz Enriquez, a Hamilton-based personal finance educator at Ambitious Parenting.
Parents shouldn’t rely on the education system to teach kids about finances, especially since they may not cover a lot on the topic, she said. Instead, learning should start at home and whatever children discover outside of the household can be considered supplemental.
Parents don’t always take this approach, however.
Often, parents will hold back from talking to their kids about money because they’re insecure about their own financial situation. These might be parents who are in debt, don’t understand how to invest, or just generally have the mindset that they’re “bad with money,” Enriquez said.
But, even if you don’t have a handle on the stock market, talking about how to spend within one’s means, how to save money, and what delayed gratification looks like around money can go a long way, she said.
Bruce Sellery, CEO of Credit Canada Debt Solutions in Toronto, said parents may also stay tight-lipped because they want to shield their children from the constraints they feel about money, especially as finances continue to get tight for a lot of Canadian families amid soaring inflation.
He argues, however, that there’s value in having conversations with your kids in a transparent and age-appropriate way.
“One of the things we’re preparing our kids to learn is how to navigate risk. And, if you don’t learn how to use money as a tool, as you grow older, you’re exposing yourself to real risks.”
Conversations around money can start as soon as you begin engaging with your kids about any topic, Sellery said.
“With my kid, they were in the grocery store with me from the time they were born and as they developed language, I talked to them about everything,” Sellery said.
As they walked down the produce aisles together, Sellery said they would scope out fruits and vegetables and discuss how much they cost.
Children become interested in being part of that experience and the lessons can become more vivid and specific as they get older, Sellery said.
“Over time, you’ve got a kid who can look at the unit price on a box of cereal, and that happens when they are maybe five, six or seven depending on their development.”
When speaking with kids about money, and specifically needs and wants, focus on the facts rather than letting emotions get involved. And, make sure that too much time doesn’t pass between these conversations, Sellery said.
“If you can’t think about the last time that you talked about money, it’s been too long. You should be able to recall the last time that you talked about it.”
Some conversation starters could begin when you’re paying bills at the dining room table, he said.
If you’re about to pay the credit card bill, for example, highlight how much you’ve been spending and on what items. This is also an opportunity to explain what happens when these purchases are not repaid on time.
If you have a Registered Education Savings Plans for your children’s post-secondary education, talk about how that specific savings account works and the value of putting away money for the future.
And, when it comes to the activities your kids enjoy participating in, open up a dialogue by explaining which activities cost money and why certain choices have to be made.
Sellery doesn’t believe it’s helpful to shield kids from scarcity, and advises that if families don’t have actual scarcity, parents create it so that their kids understand there are sometimes limited resources to work with.
"I intentionally don't replenish on certain things that they have an interest in so that they don't think that there's just some magical place where sugar and flour and all the things they like to bake with just automatically shows up," he said as an example of creating financial scarcity.
But, while you might want to be frank with kids about money, be careful that you’re never guilting them about how much you work or how much you spend on their behalf.
“There is a very fine line between making your kids aware of the trade-offs you’re making and guilt,” he said.
For example, guilting might look like saying “I’m working overtime for you and you’re not trying hard at ballet.”
Instead, you might want to say “Listen, if you don’t want to do ballet, that’s fine. We can not pay for that. But, if you’re going to do ballet, you need to show up and be ready,” he said.