Tuesday, Nov. 18, 2014

Money Matters

Tips Target Teens 

Life skills include managing money

Submitted by Sarah Pederson, Envision Credit Union

 

roper money management may not be the first thing that comes to mind when parents think about essential life skills to pass along to their teens. But according to Envision Financial expert Steven Gillespie, learning about finances should be just as important as learning to drive.

 

“Finances and budgeting rarely make the top 10 list when it comes to parenting priorities and many people are intimidated by the thought of educating their children about money,” says Gillespie, an investment advisor at Envision Financial’s Chilliwack City location. “In fact, a recent survey by the Bank of Montreal revealed that the majority of Canadians would rather talk to their children about the facts of life than about their financial situation. However, as personal debt levels continue to grow, the need for proper financial education is only becoming more and more obvious.”

 

Fortunately, according to Gillespie, there are many simple and practical ways a parent can educate their teens on foundational financial habits to help set them up for success in the future.

 

Put them in charge of their monthly budget
“Work with your teen to establish a monthly budget for items like gas, clothing and entertainment,” encourages Gillespie. “This puts the responsibility in their hands. If they make poor spending decisions they’ll quickly run out of money and learn a valuable lesson. On the other hand, when they spend wisely and are able to save up for something special, they’ll gain appreciation for the concept of saving.”

 

Show them the power of compounding
“Parents can teach their teens to pay themselves first by putting a minimum of 10 percent of any money they receive into a savings account while also helping them to learn about the concept of earning interest,” says Gillespie. “It’s a common fact that the earlier people get into the habit of saving, the better off they’ll be in the end. For most people, it’s motivating to watch their savings grow, to see the power of compounding in action and to have a goal to work towards. To provide extra encouragement, a parent can even offer to match a certain percentage of any money saved. ”

 

Involve your teens in decision making
“Next time your family has a major purchase to make, involve your teens in the process,” suggests Gillespie. “Take your annual family vacation for example. I’ve known of families who provide their teens with a budget and then each family member researches accommodations, transportation and daily cost allowance for the destination of their choice—ensuring it fits within the budget provided. Each family member then gets a chance to present their idea and budget and the whole family gets to vote on where they’d like to go. It’s practical, hands on learning and fun at the same time.”

 

Help them plan for their future
“It’s amazing how many families don’t discuss expectations around financing post-secondary education,” says Gillespie. “Talk to your teens about their options and explain to them what you are able to contribute. Then work with them to develop a plan to make up the shortfall—whether that be through scholarships, bursaries or a part-time job. Providing your teens with information about the cost of college and the burden of student loan debt will help them make wise decisions about their future.”

 

Get their guard up
“Teens can be easy targets when it comes to scams like identity theft,” warns Gillespie. “Teens are online constantly and don’t always have the same inhibitions as their parents when it comes to sharing personal information. Warn your teens about the importance of safeguarding their name, bank account information and social insurance number. Educate them about common scams and encourage them to regularly check their bank account for fraudulent activity.”

 

Be a good role model
“Of course, any financial education you provide will have less of an impact if your teens don’t see you modeling the behaviours you’re teaching,” reminds GIlliespie. “Sometimes this can be a good wake up call for parents who need to increase their own financial literacy. If you feel you could use some additional financial education or would like to create a financial plan to prepare for the future, connect with a financial planner to set up an appointment. While you’re at it, bring in your teens—it’s certain to be an eye opening experience for them as well.”

 

About Envision Financial

Envision Financial is a division of First West Credit Union, B.C.'s third-largest credit union, with 38 branches and 29 insurance offices throughout the province operating under the Envision Financial, Valley First and Enderby & District Financial brands. Led by Launi Skinner, First West has $7.7 billion in assets under administration, more than 177,000 members and close to 1,300 employees. For its extensive community involvement, Envision Financial is designated a Caring Company by Imagine Canada. For more information, visit www.envisionfinancial.ca

 

 

 

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