Financial literacy begins at home. It's never too early to teach kids about the value of money. "They're consumers, even when they're very young," says Annie Savard, an associate professor at the Department of Integrated Studies in Education at McGill University in Montreal. "Before they even start school, they can understand some money concepts, like the difference between a need and a want.
"When kids receive money as a gift, it's good to ask them what they want to do with it," says Savard. "You can ask them why they want to buy a certain thing, and if they can wait. If the answer is no, parents can give them some other options, like taking a book out from the library instead of buying it, or finding second-hand items that won't cost full price. It shows them that there are different ways to get what they want without spending all their money. And saving becomes a point of pride."
The older kids get, the more easily they grasp new ideas. It's important to take advantage of opportunities to talk about financial issues, whether it's following a budget at the grocery store or explaining the power of compound interest in a registered education savings plan (RESP).
"The students who excel at financial literacy come from families where kids and parents talk openly about money," says Savard. "One action informs the other."
The role of school
That said, money can be a touchy subject to bring up at home, depending on the parents' own relationship to money. School can help fill in some gaps, but the education system doesn't really teach kids much financial literacy, according to Savard. There's a mandatory financial literacy class near the end of high school, but it's not a prerequisite for graduation. Therefore, young people coming out of high school aren't getting all the skills and information they need to manage their money. While at the same time they're beginning to work at a younger age.
A 2019 study1 showed that almost half (45.6%) of 12- and 13-year-old students work while they're in school; this number has gone up 10% since 2013. And it's probably a good bet it's gone up again in the past 2 years. "The way people consume now has also changed with the rise of online shopping. There's less cash circulating. We need to rethink how we teach personal finances to young people. Ideally, we should be teaching it every year in high school," says Savard.
The aim of the curriculum is to raise awareness about sound money management through topics like debt, savings and purchasing power. But Savard says that other topics should also be included, like understanding a paystub and at-source deductions, or choosing the right bank account.
Other ways to learn
Since 2014, Jonathan Cossette has been helping 16- to 25-year-olds understand their personal finances through Personal Finance: I'm in Charge, a program developed by Desjardins and several partners. As a workshop facilitator, Jonathan takes a dynamic, participative approach to get participants interested and engaged. "You need to find interesting ways to cover the material so they stay engaged," says Cossette, a financial literacy advisor at a youth employment centre in Quebec (Carrefour jeunesse emploi Nicolet-Bécancour).
For 17 weeks, 2 hours at a time, Jonathan talks about real-world scenarios that participants can relate to, like what to look out for when signing a first lease, the importance of using credit correctly or saving up for a driver's ed course. "I also ask them to make a budget for a personal goal," he adds. "It makes it easier for them to appreciate why it's important to make a budget—something that many of us have trouble with. It helps them establish an early reflex to watch their spending." The goal is to leave them feeling financially empowered.
"We want them to understand they're in control of their financial situation, that money is a vehicle to achieve the goals in their life that reflect their personal needs, wants and values," says Cossette.
What about younger kids?
Of course, it's possible to learn in different ways and at any age. Sometimes all it takes is a couple of financial setbacks to make us realize we need to learn more. There's so much information out there about personal finances. People are covering different topics from different angles almost every month: how to get out of debt, how to reduce your taxes, saving tips and a lot more. Pop into your favourite bookstore or spend a little time online and you should be able to find exactly what you need. Be careful though—make sure you're reading something credible! There's so much information on social media, but some of the advice isn't always relevant. "There's different information from all sorts of people who aren't exactly experts," says Savard. "You need to take a step back and think critically about what you're reading." Talking to an advisor or a financial planner can also help you see things more clearly. Their role is to provide guidance and explain your options.
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What's covered in our feature article:
1. Renforcer le soutien aux étudiants et aux entreprises en matière de conciliation études-travail-famille (in French, PDF, 3.6 MB) External link. This link will open in a new window. (Better support for students and businesses handling the work-life-school balance) Centre d’étude des conditions de vie et des besoins de la population (ÉCOBES), 2019.