I think if you asked any parent these days what about raising children is keeping them awake at night, it could be a number of things, but one of the top 3 concerns for sure would be how kids today have no appreciation for money.  Kids these days don’t really understand the concept of money and why would they, parents today are basically glorified ATM machines in the eyes of their children.

Most parents we talk to are overwhelmed with the expense of raising children. Not only are the basic needs draining on parents, but the consistent wants of the children is exhausting.  The keeping up with the Jones’s teen edition is on full stage these days with the need to fit in and the social media barrage of advertisements.  Most parents themselves are not very strong on financial management and we sometimes look to the school system to help, but I for one can say, that isn’t happening.  The school system has really missed a great opportunity to make a difference in their curriculum that could be taught to a spend first, save second.

The education system, in my opinion, hasn’t kept up with the social changes in the world we live in and unfortunately, some courses that continue to be taught could be replaced with subjects that are critical to long-term success in life, such as financial management.   Financial management 101 could be an amazing teach. Helping kids understanding budgets, paying bills and debts on time. Understanding the cost of taking on credit and avoiding the impulse of the wants in life.

I read a report about debt a few months back and what was startling is that the major banks in Canada currently make 85 million dollars a day and of that 79 million dollars comes from their debt business. That’s 93% of banks’ profits are from selling their customers’ debt products.

Learning about money starts as early as 7 or 8 but our teens and 20s are where the majority of learning has to be taught.  This  new generation of millennials will be starting out behind the eight ball when it comes to the job market. Currently there are 12 million millennials competing for work. The unemployment rate of millennials is running at 17% nationally, they are loaded with school debt and they are in a competitive job market.

Teens and millennials are traditionally spendoholics.  When you breakdown where they spend their money, is goes like this: 21% on clothes, 18% on fast food, 10% on personal care, 9% on shoes and 8% on electronic gadgets.

So what are parents to do?

Talk to them and show them.

Talk to your kids about how hard money is to make. Explain to them about your pay cheque and show them how many deductions there are left and how you need to budget out the remaining money until the next pay comes.

Give your kids an allowance.

An allowance is not designed to be a reward, it should be designed so that kids learn how to manage money. When they get their allowance,  a good rule is to give your kids weekly a dollar for every year of age, so if you have a 9 year old, he or she gets 9 dollars a week allowance. Have the kids divide the allowance into a “Save Account”, a “Spend Account” and a “Give Account”.  What has worked for me is actually setting up jars with labels. 50% to Spend, 40% to Save and 10% to Give (Charity). This will help them learn about budgeting each time they get paid. Once the Save jar has a substantial amount open up a bank account for safe keeping.

Let them make decisions on how to spend.

Next time they ask for something or need something, give them a budget you can say to them, “if you spend more than the budget dictates, then you can use your money to make up the difference, but if you spend less than the budget, the savings you can keep”. This will teach them to be careful and shop around for the best deals. You can even let them go online looking for deals.

It’s important that all children are taught some financial management from Mom and Dad. Even if you as the parent are not the most efficient with your money, you owe it to the kids and their futures to make them aware of the expensive financial world we live in.  It’s  becoming more and more difficult to live in a world of instant wants and needs, but as I always say… savers don’t become spenders and spenders don’t become savers… if the school system is not able to teach our kids about money, then we owe it to them to teach them.

Read more articles from David Somerville, including The Financial Stress of a Separation.