Financial literacy in Alberta – it should start at home.Growing up, money was not a subject that was talked openly about at home. We were not taught about credit, how it worked and what impacts it could have on our lives. We were told that saving for what we wanted was preferable to borrowing for what we wanted. My journey towards financial literacy continued when I entered university and began my journey on the path of becoming a Chartered Accountant. I believe that the journey continues even today. Financial literacy concepts can begin at home and at an early age. Research exists that suggests that basic money concepts and habits can be learned as early as age 7. It can begin with the introduction of an allowance that is earned for doing chores at home to learn the value of earning money and that you have to work for the things that you want. Set up a savings account where a portion of the allowance is allocated to save for something the child wants to have. These two points can form the basis of developing financial literacy skills for the future.
As a child enters into the teenage years, additional concepts of savings, budgeting and investing can be introduced. Introduction and responsible use of a small limit credit card can be introduced at this level. Introducing the concepts of the use of credit, the impact of interest on borrowed money, the importance of paying off the credit on time and in full each month will tie into their budgeting skills as well.
The journey of financial literacy should continue as the child enters adulthood. These include concepts such as borrowing to fund education, setting aside money early for their eventual retirement in Registered Retirement Savings Plans (“RRSP”) or contributing to a Tax Free Savings Accounts. While setting aside money in an RRSP may seem a bit far fetched to them, explaining that putting the funds away earlier can result in more funds being available to them when they do retire, than starting that process later in life. For some, this may be the first time that they will be living on their own and the budgeting skills that they learned earlier in life will be invaluable to them now.
For more tips, resources and educational tools, check out the following:Canadian Financial Literacy Database – Canada.ca (fcac-acfc.gc.ca) Teaching children about money – Canada.ca