Making payments using a phone with Google Wallet or Apple Pay may make it harder for kids to keep track of spending.mihailomilovanovic/iStockPhoto / Getty Images
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As tweens and teens return to class, many of them are also experiencing some financial freedom, whether it’s from purchasing their own clothes and snacks or from starting part-time jobs.
While kids will likely make money mistakes, now is a good time to ramp up their education to lessen any major blows, says Paul Shelestowsky, certified financial planner at Meridian Credit Union in Niagara-on-the-Lake, Ont.
Globe Advisor spoke with Mr. Shelestowsky about children’s financial behaviour.
What’s different about kids’ relationship with money today?
These days, [tweens and teens] pay by using their debit card or on their phone with Google Wallet or Apple Pay. The challenge for them is keeping on top of the money. They start tapping their card everywhere and a week goes by and [their] monthly allowance is gone.
Between TikTok, Instagram, YouTube and TV, kids are just bombarded with more consumer goods than ever before. The biggest challenge most parents have, and this is irrespective of a kid’s money personality, is separating the difference between a want and a need. In most kids’ minds, everything is a need when in reality, 90 per cent of the items where they’re looking to spend money [are] a want. As parents, we already look after our kids’ needs.
How do parents encourage delayed gratification?
They have to put in the work. It takes a lot of education and trial and error, depending on the kid’s money personality. There’s no magic bullet.
I had my personal lightbulb moment with my son years ago. We had a habit of going to Canadian Tire to buy things for the house renovation and, as part of that, we would buy him something. We realized we were creating a bad expectation and it was a challenge to work through that concept and educate him. Just because we go to a store doesn’t automatically mean he has to get something. He finally got it after a few months of emphasizing the point.
How do you help tweens and teens understand budgeting?
It means tracking everything they buy and what they save. It takes some work to look at all the numbers and data. I believe if kids never actually see money going in and out, then they lose the concept of the value of a dollar.
When my son got a part-time job in high school, we created two bank accounts for him. With the first account, we didn’t care if it was down to zero soon after the money was deposited. But the second account was his savings account, in which he put a portion of his paycheque as forced savings with the aim of growing it over a year or two. He couldn’t withdraw from that account without running it by us first.
It’s a good idea to have some money for kids that’s harder for them to access. This account wasn’t attached to a bank card, for example. It’s about having different pots of money with different purposes and levels of access.
This interview has been edited and condensed.
– Deanne Gage, Globe Advisor reporter
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– Globe Advisor Staff