Money talks: 6 conversations to have as your kids grow up

Parenting is described as one of the toughest jobs in the world — but it’s also the most rewarding. One of the greatest joys of parenthood is watching your child learn and grow, so naturally you’re always on the hunt for ways to help shape them into well-rounded individuals.

How parents go about this will differ from household to household, but there are certain life lessons that all kids should be taught. You’ve already covered honesty, manners and conflict resolution — but what about proper money management?

To help your children understand money and eventually make the most of their hard-earned dollars, try starting with these age-appropriate talking points and conversation starters.

Children (5-10)

What money is

From your children’s perspective, things like food and clothes may as well grow on trees. For this reason, the first lesson you introduce should be the basic concept of money. At this age, you can start paying your kids an allowance for completing household chores, like tidying up their bedrooms. Try asking them to divide that allowance into three different jars (saving, spending and donation) and ensure that an equal amount is placed into each one. If they want extra money to put in their “spend” jar, consider adding additional tasks on top of their weekly chores to show them the value of hard work.

Budgeting

You’ll also want to consider broaching the subject of budgeting. The next time you’re at the grocery store, give your children $5 each and challenge them to build their own lunches. Ensure that the items they choose are healthy ($5 buys a lot more candy than it does apples, after all) and regroup at the end of the trip to talk through any obstacles they faced. At this point, you can also encourage them to pay for the items they chose. This will familiarize them with handling money, whether physical or digital, and performing financial transactions.

Preteens (10-13)

How money is earned

Once your children’s ages hit the double digits, it’s time to start talking about how money is actually earned. If you haven’t already done so, you can start by opening savings accounts for them. Allocate their allowance through e-transfer and encourage them to add any money earned from jobs like paper routes or babysitting gigs to their account. By doing so, you can teach your preteens how to use a debit card and make deposits to their account while also teaching them that money is a finite resource requiring careful management.

The importance of giving back

By this point, your children are likely aware that some people have more money than others. Teaching the value of giving back to the community, whether through charity or volunteer work, is a crucial lesson at this stage. Make it more fun and engaging by finding a charity organization that corresponds with your children’s interests. For example, if your daughter fancies herself an aspiring veterinarian, encourage her to donate her time or money to the local animal shelter.

Additionally, this is a great age to introduce the importance of considering the impact of each purchase, not only on finances but on the environment as well. Encourage your children to buy items with less packaging and use reusable bags and containers for food.

Teens (13-18)

Building credit and paying off debt

With part-time jobs and college on the horizon, the adolescent years are when you’ll want to tackle discussions about credit and debt with your children. It’s important to discuss how and when interest is applied to things like credit cards and student loans, along with the basics of building good credit. Be sure to emphasize that credit cards don’t equal expendable income and explain what the consequences are for making minimum payments to pay off debt. A great activity to try during this age bracket is to loan your children money for a larger purchase, like a new laptop or bike, and develop a repayment schedule together. You could even charge them “interest,” and put it towards their education fund or a similar investment in their future.

Investing

Once your teenagers have grasped the foundations of proper money management and are making some money of their own, encourage them to start building an investment plan. If you already have a Registered Education Savings Plan (RESP), such as those available through HSBC, your teens may already be familiar with Mutual Funds. Consider involving them in the investment process by allowing them to contribute a small amount of their own money or by working with your financial advisor to start up their own savings and investment accounts, such as a High Rate Savings Account (HRSA) or Guaranteed Investment Certificate (GIC). Not only will this help them build their money-management skills today, but it will also set them up for the next stage of their life.

While finances might seem like a complex, or even off-limits, topic, there are plenty of kid-friendly discussions that can be had at every stage of your child’s development. By having meaningful conversations about wealth management with your kids, you’ll be empowering them to make more responsible financial decisions down the road.

_{It should be noted that these tips are for informational purposes only, are subject to change without notice, and are not intended to provide specific financial, investment, tax, legal or accounting advice to you, and should not be relied upon in that regard. You should not act or rely on the information without seeking your own financial, investment, tax, legal or accounting advice.}