There are few things children love more than playing pretend but with cash going the way of the dinosaurs, how do we teach our kids that money isn’t make believe? Canada’s credit and debit processor Moneris, predicts that by 2030 only 10% of purchases will be made in cash. As brick and mortar retailers begin to close their doors and the Canadian penny disappears from view, the concept of finance may be more difficult for little ones to grasp.
Go To The Store
According to Canada Post, 76% of Canadians shopped online in 2015 but the occasional trip to the store may prove worthwhile for your kids. Children learn by doing and inviting them to participate in real-life rather than digital transactions can help them understand the relationship between consumers and businesses.
Cash is context. Toting around your change purse might feel a bit cumbersome these days but offering children small empowering experiences with currency can give them a deeper understanding of its value and better prepare them for a cashless future.
Let kids flex those developing mathematical muscles by counting and sorting spare coins, feeding the parking meter, or purchasing a drink from a vending machine all by themselves.
Throw Away the Piggy Bank
While eschewing the traditional ceramic pig might tug on your heartstrings, giving children a visual guide can bring clarity to their earliest banking experiences.
Using a clear vessel like a mason jar allows youngsters to watch their money as it fluctuates with each deposit and withdrawal. It might even have them questioning whether that extra scoop of ice cream is really worth unloading those precious quarters.
Talk About Household Finances
Parenting comes with no shortage of awkward conversations but money doesn’t have to be one of them. Canadian youth are ready to talk finance. A survey conducted by the Canadian Foundation for Economic Education reveals that young Canadians possess a strong desire for financial literacy and that over 60% of respondents would prefer to learn about money matters at home opposed to other venues.
While explaining the cost of living to a preschooler might be overly abstract, parents can clarify things like household utilities in simple terms. Teach young children that every time they leave a light on or run the water it costs money. Allow older kids to participate in setting shared financial goals like saving for a vacation.
Give An Allowance
Introducing children to the relationship between work and money by giving a small allowance fosters financial independence and might help deepen their appreciation of a working parent. In addition, experts suggest that it can have lasting effect on the financial choices they make. Robin Taub, chartered accountant and best-selling author of “A Parent’s Guide to Raising Money-Smart Kids“ asserts, “Kids do need the opportunity to manage money starting at a young age, where they can make little mistakes when the stakes are low and learn from them.”
Come up with a list of age-appropriate household tasks, agree upon their cash value, and let your little one get to work. Just remember to give them freedom with their earnings.
As more daily transactions go online and mobile, maintaining a connection to physical money can help children learn abstract financial concepts. Taking advantage of daily teaching opportunities and providing tangible experiences with money may be one way to set children up for financial mindfulness in the digital age.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.