How to be a Great Money Coach to your Kids

Enriched Academy founders Kevin Cochran and Jay Seabrook have always been passionate about teaching children and young adults the basics of personal finance. Jay and Kevin originally visited schools to work on their public speaking skills, but they soon found there was a real need and interest for teaching kids about money.   This became the basis for starting Enriched Academy and while we now focus on Canadian financial literacy for all ages, our passion for teaching kids has never waned. We recently had our financial education services selected for use in the Alberta Public School system, and we also work with various school boards and colleges across the country. Over the years, we have continuously refined our school programs and have compiled a great list of tips below to help all of you at-home financial educators teach your kids about money matters.   1. Don’t call it an allowance A weekly allowance starting around age seven is a good idea but be careful; it’s not something that’s received, it’s earned, and children need to know the difference.  A checklist of weekly tasks and some “pay” for doing each one is a great way to instill this idea. Reinforce the concept by designating a regular “payday” each week.   2. Don’t assume it’s too difficult Should you buy stock for a 10-year-old - absolutely! There are plenty of kids whose parents took the time and effort to explain shareholding and how it works. Kids are very familiar with many publicly traded companies like Disney, Roblox, Mattel and McDonalds. Holding a few shares may not return enough to put them through college, but it will teach them the basics of investing, risk, and return for managing their finances in the future.   3. Don’t stop your kids from occasionally buying junk Rather than prohibiting younger kids from buying something that doesn’t meet your threshold for play value or quality, let them buy it once in a while and learn a lesson about value (see #5). A mood ring is usually interesting for about a day-and-a-half, and $5 won’t break the bank. If someone learns to better evaluate their purchases in the future, it was money well-spent.   4. Don’t give an advance on their allowance The number one financial problem from young adults to retirees is spending money they don’t have – usually with a high-interest credit card. The need for instant gratification is a never-ending struggle but building up resistance while still young will help keep it in check during later life. For big-ticket items, write down your savings goal and create a tracking chart together with your kids to help them visualize their progress.   5. Don’t talk about cost, talk about value and need “How much better is an iPhone 12 than an iPhone 10… well, 2 of course!” If your tween wants that latest and greatest must-have item, challenge them to explain the value beyond being new, trendy, or fashionable. A 30-speed MTB may impress his friends, but does your 12-year-old really need thirty gears to get around the neighbourhood? There is a reason lots of millionaires (and billionaires like Warren Buffett) drive plain cars – it’s all they really need!   Financial habits start young and last a lifetime so it’s important to get your kids off on the right foot. After all, you don’t want to be the one paying for their household expenses after they leave home or bailing them out of credit card debt when a lack of financial education catches up with them as a young adult. There is no reason to not have frank and open discussions with your kids about money and getting started early will just make it more comfortable and natural as they grow older.   Thank you!