Discussing something as stressful as finances with your family can ease tension, lead to solutions and teach your kids some important life tools they can use that they won’t learn in school. Uninformed children grow up to be uninformed adults who make poor choices for themselves and their families and the cycle begins again.
If you are interested in advocating for your family’s, and your child’s financial future, here are a few places to start, as a family.
Live on one income
If you are newly married or soon to be married, attempt to live on one income. This does not mean quit your job. It means live on the higher income, and put the other income into a savings account.
This works best if you can have the higher income direct deposited into your chequing account, and the other direct deposited into a savings account so you don’t have to see the extra funds while you are doing your day-to-day banking and paying bills.
This practice will be very beneficial to you especially if you are planning on starting a family one day as you will be one income short when maternity leave begins. When this happens, if you are already used to living on one income, it won’t be too much of an adjustment.
By living on one income, or on less than what your full pay is, you will be better equipped to handle those financial bumps in the road such as maternity leave, job loss, a new furnace or short-term disability and you will even get an emergency fund out of it.
If you are not able to cut back so quickly, start small and increase your savings amount slowly each month while you get used to cutting back and making changes.
Start an RESP for your baby
If you are a new or expecting parent, when your child is born, you can apply to the Canadian government for both the Canada Child Tax Benefit (CCTB) and the Universal Child Care Benefit (UCCB). You may also be approved for a Provincial Tax Credit (where applicable) depending on your family income.
If you are financially able, consider opening an RESP for your child as soon as they are born and make your monthly deposits at least equal to those that you get from all of the tax rebates you receive. For example, if you receive a combined total of $100 per month from the government(s), try to put that $100 per month into an RESP to save for your child’s post-secondary education. In addition to saving for your child’s future, you will also get additional money in grants from the government to further increase your savings because you opened the RESP. The UCCB runs until your child is 6 years of age, so if you start an RESP at the beginning, you won’t be putting any of your own money in for the first 6 years. At $100 per month (example), you would have $7,200 saved up after the six years and none of it will have come from your pay cheque. This is not including any additional interest, tax breaks or grants from having the RESP.
You can discuss the benefits of an RESP and open one at your financial institution.
Teach kids about work, spending and saving with allowances
Consider starting a weekly allowance with your child as soon as they are old enough to help in some way around the house, and when they begin asking about money and/or material things; usually around three to four years old.
I recommend giving a weekly allowance of between $0.50 – $1.00 for each year of age. If your child is 5, then you would start off between $2.50 – $5.00. Begin by having an age-appropriate discussion about what an allowance is and what is required of your child in order to get their allowance each week.
To start, chores can be as simple as pulling their bedsheets up when they get out of bed in the morning and making sure their stuffed bear is lying on the pillow.
Be consistent with the day that you are giving out their allowance and praise the effort that your child is putting in to their new responsibilities. Make yourself available to answer any questions they have about their allowance and ask them what their plans are for their money.
You can also teach your child the importance of saving by asking your child to keep some money back from each allowance and saving it for later. We are planning a trip with some family this summer and our three and a half year old has been saving one dollar from each allowance for it. She doesn’t know what she wants yet, but she is excited to see everything that will be available to her when we get there.
When it is time for a raise in allowance that you sit down with your child and praise them for the work they did and talk about their new allowance and any different responsibilities that come along with it if necessary. Most of all, be excited for them – they are taking a big step.
Making decisions to stretch your dollar
Teach kids about different ways they can make their allowance money go further. Introduce them to the endless book, game and movie titles they can borrow from the library. If there is a book they like, you can give them the option of saving their allowance to buy it from the store, or asking for it as a gift for their birthday or other holiday.
If you are having a garage sale, you can show kids how selling the toys they no longer want can help them to make enough toys to buy new ones that they can play with instead. You can also teach them how to make money by selling lemonade or cookies at your sale. Show them that they have to pay back some of their earnings to pay for their supplies, and relate their net earnings to money that mom and dad bring in.
Showing children that the amount of money they have in the end is dependent on the decisions they make will help them down the road when they start making their own money.
Stay on top of your bills
By reading your bills and periodically calling your providers to review your account, you can take advantage of promotions and specials.
The summer months are a good time to consider cancelling your cable in an effort to save money. Almost all of the shows during the summer months are repeats and show times are inconsistent. Since many people opt to give up their cable in exchange for a summer outside around this time, your company may offer you a better deal to stay with them.
Talk about some money issues as a family
It wasn’t too long ago that the topic of money was not discussed in the presence of children. By discussing some aspects of your family finances, you are giving your child some insight in to the big picture. For example, if your child wants a toy that is just too expensive to purchase at the moment, you can talk a little about the family’s lack of funds by telling your child how you really wanted a new stereo, but you just can’t afford it. Then ask your child if there is anything they want too that they can’t have at the moment. Sometimes knowing that they are not the only ones who are ‘going without’ makes it a little more bearable.
Conversations should be kept age-appropriate and light. Most importantly, when you are done with any conversation, check to see if your child understands by asking them to tell you in their words what you said. This will help to clear up anything they are still confused about.
Money can do that to you. Start small by focusing on one of these ideas and go from there.
< br />Sheri is a wife to a rockstar-at-heart husband and mama to two little girls who march to the beat of their own drums. Growing up, her father told her that “If you don’t look after your own money, there are a lot of people out there who are willing to look after it for you!”. You can read more from Sheri on her personal blog, This Birds Day. You can also follow her on twitter @ThisBirdsDay or on Facebook.