Popular points of discussion are about goals for the money they earn from a part-time job.Iza Habur/iStockPhoto / Getty Images
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With a deficiency of financial literacy education in schools, some advisors are taking matters into their own hands by teaching children directly about money matters.
Tanis Mathiesen, chartered professional accountant and senior manager at KPMG in Calgary, says kids’ relationship with money starts with how they observe others using it. She volunteers in classrooms of varying age groups through the non-profit youth organization Junior Achievement to discuss money matters with students interactively.
For instance, one student observed her parents putting all purchases on their debit or credit cards and asked Ms. Mathiesen why everyone doesn’t just use a card to buy what they want.
“Kids don’t always understand how debit and credit cards work because they haven’t been told explicitly,” she says. “I explained that credit cards are a tool that you can use and is a promise to pay back money later. It’s not just a magic get-whatever-you-want card, although that would be nice!”
It’s important for them to understand the context, she adds.
Alim Dhanji, senior financial planner and senior insurance advisor at Assante Financial Management Ltd. in Vancouver, says these thoughts speak to today’s world of how transactions are conducted. He also educates kids in the classrooms through Junior Achievement.
Mr. Dhanji says parents grew up having physical money to count, but today’s kids may see nothing but cards as many items they are interested in, such as monthly game subscriptions, require access to plastic.
“Everybody wants to have instant gratification with purchases,” he says. “They want to be able to keep up with their friends. Meanwhile, there are lenders that want to give students access to credit. So, it’s important not to get caught up in all of that and understand how it works.”
‘Meet’ them where they are
Kurt Rosentreter, certified financial planner and portfolio manager at Toronto-based Manulife Securities Inc., likes to meet kids where they are and start from there – whether it’s what to do with birthday money from grandparents, or understanding all the paycheque deductions from that first summer job.
He notes that parents’ entry into financial discussions with their children often starts with them opening up a bank account, getting a debit card, withdrawals and deposits. While it’s a logical place for parents to get started, he says it’s “such a small part of financial literacy.”
Seven years ago, Mr. Rosentreter started running one-on-one money skills training for students and new professionals, aimed at 16-to-26-year-olds. (He will consider working with younger teens who are serious about learning.) Noticing the “anemic” approach the then-teens’ schools took to personal finance and hearing similarly from other parents motivated him to develop a nine-part curriculum of his own. Topics covered include lines of credit, interest, budgeting, cash flow management, investment accounts, taxes, and the purpose of insurance.
Each teacher is a member of his staff and Mr. Rosentreter notes that it can take a young adult about a decade to get through the entire program if they do one or two parts during the summer.
“The overwhelming comment from parents was our kids are not really knowledgeable on broad personal finance,” he says. “The basic amount of information they are getting in school wasn’t being covered adequately and the kids don’t know any different.”
Kids ‘push away from their parents’
Mr. Rosentreter says he prefers to work with older kids because he believes to truly get finances, it needs to be tied to their real lives for concepts to really sink in. Interested teens meet with his team for an assessment of their knowledge level and interest. Popular points of discussion are about goals for the money they earn from a part-time job. Mr. Rosentreter might advise setting up multiple accounts to save for each goal.
“It’s often three-dimensional,” he says. “What is the goal, what will it cost and when will it happen?”
After a period of time, usually by age 17, Mr. Rosentreter will ask the parent not to accompany their teen to the sessions so the teen can be more independent.
He doesn’t charge his clients extra fees for providing this service.
“I feel it’s worth it as I see the reaction from the parents,” he says. “And that’s good, long-term valued-added support.”
But the end results can reap rewards. For example, Mr. Rosentreter has had some young adults contact him directly about a financial issue – not wanting to discuss it with their parents.
“That’s a selling feature of the program. When kids are young, they push away from their parents but they won’t push away from me,” he says. “They value the independence and the objectivity of someone who is not a blood family member.”
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