How many times have you been stressed about money? 

Have you ever become so overwhelmed by the numbers in your bank account or the upcoming bills that you thought your head might fall off? 

Have you ever been stuck at a job you hate so that you could pay your bills? 

Whether we like to admit it or not, money is a massive part of life. In Canada, 68% of divorcees have claimed that finances were the leading factor in their divorce. Furthermore, many people attribute their stress and depression to financial concerns. 

Yet, we still aren’t adding financial education into the secondary school curriculum. 

In secondary school, children learn history, problem-solving, proper grammar and more necessary tools that will assist them throughout life. However, they aren’t educated about their finances. 

Millennials (and now Generation Z’s) graduate high school without knowing the importance of their credit scores or how to effectively budget their money. Now that people have recognized the problem, it’s time to discuss the solution: Children need to learn the importance of finances at home. 

Budgeting 

Budgeting isn’t thoroughly taught in school even though a reasonable budget can make the difference between financial comfortability and financial stress. 

Consider a mock-up budget for your child. You can supply them with an allowance for chore work. Create three jars: (1) Chequings account, (2) Savings account, and (3) Giving account. 

Teach your child the importance of giving! Let them chose a charity or cause that they are passionate about and let them be a witness when you give this money to their chosen charity. Make it an exciting event. Hopefully, their joy in giving will carry them throughout adulthood as well. 

As they get their weekly allowance, you can take the opportunity to help them oversee their funds. If they want to save up for a pricier purchase, you can help them save. You can also create a fixed bill, such as “rent” that they must pay once a month. Even if it’s two dollars, they can learn to prepare for that bill when necessary. 

(Seeing as most people don’t make their young children pay rent, you could even save that for a “bonus” at the end of the year). 

Debt

Debt is (usually) an unavoidable part of life. There is good debt, and there is bad debt. 

Good debt refers to an investment that will grow in value – such as housing or a student loan. Bad debt refers to something that will depreciate – such as a car loan. Though it’s considered “bad debt”, many adults carry it. If you’re good with payments, it will still improve your credit score. 

Debts, such as credit cards, can hold a high-interest rate. Many people fall victim to leaving their debt in an attempt to build their savings account. However, as your debt sits, it’s gaining more interest and draining you even more. Work diligently to pay down your debt. 

Debt education can be a great learning opportunity for children. If your child needs to borrow some money, lend it to them with a strict payment plan and add interest. Penalize them if they neglect payments. 

Credit Scores

If you ask anybody under the age of eighteen, chances are they will know very little about credit scores. However, if you need a mortgage or loan, the first thing that the bank looks at is your credit score. 

Credit scores majorly control how the bank sees you. If you don’t have enough credit, you won’t get a loan. If you have poor credit, you won’t get a loan. 

The irony? 25-year-olds have very little information contributing to their credit score – which is essentially just an average of their reliability. If they accidentally missed one payment, it’ll give their score a big hit. Having a nearly flawless credit history by the time you apply for a mortgage is imperative. 

There was a time that only mortgage payments and credit card payments contributed to your credit score. Now that Millenials and Generation Z’s borrow more and more money, more billing companies will report back to the Credit Bureau. 

That’s right – if you missed your cellphone payment at 18-years-old, that could potentially harm you when you apply for a mortgage at 25. 

Credit scores aren’t invisible numbers. They are easily accessed and carry a significant impact. Make sure your child knows how detrimental a missed payment could be. 

Financial Stress

A common coping mechanism for adults that are stressed about money is completely ignoring the problem. This is often a contributing factor to people losing control of their finances or getting themselves into hot water. 

If you find your child getting stressed about their savings account or allowance, teach them healthy coping methods to money problems. First, engage in a relaxing activity with your children such as meditation, yoga or exercise. Second, sit down with your child and help them reevaluate their finances. Perhaps they need a new budget, or maybe just a new perspective. 

By having an open conversation with them during these times, you’re teaching them that money doesn’t have to be such a scary topic.

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Having a healthy relationship with money, and being educated on finances are two powerful things! Take the opportunity to educate your child about budgets, credit scores, and financial stress. Hopefully, this will improve their overall financial health as an adult.  

Written by Celina Dawdy