Nearly half of British Columbians say they are $200 away from insolvency, which is the fancy word for not being able to pay your bills when they’re due.
That is why Prospera Credit Union is doing what it can to help children learn how to manage and save their money before they hit adulthood. If one thing is certain, they are not going to learn those lessons in school.
Rick Danyluk, who is Prospera Credit Union’s family banking relationship manager, suggests opening an account for your child when they are six or seven years old. That gives them a place to put their birthday money.
The real learning begins at the age of 12 or 13, which is often when they start doing odd jobs and actually earn their own money.
“That way they can see the value of their hard work,” says Danyluk, who works at Prospera’s Vernon branch.
Once the bank account starts to fill up, Danyluk says parents should teach their kids about three principles: saving, spending and donating. The first two are obvious, but the third should not be overlooked.
“A portion of their money should be put towards giving back to the community that they live in,” he says.
Another option in the early teenage years—and Danyluk agrees this won’t work for everyone—is to give your child a large allowance, one big enough for them to buy their own clothes, video games or whatever else they spend their money on these days.
“That way they’re responsible to know how that money works,” Danyluk says. “When it runs out, you have to wait until next month to buy your next clothes or lunch.”
If you prefer to give your child a smaller allowance, that will still help them set savings goals and also determine the difference between wants and needs.
As a bonus your child will receive $5 per month from Prospera when you automatically deposit $5 or more into their new account monthly.
“This is a time-limited offer worth checking out,” Danyluk says.
Danyluk recalls starting a youth bank account for a family friend’s daughter when she was 12. She is now 26, but she has not forgotten many of the valuable lessons Danyluk taught her along the way. She and her fiancé saved money to buy their first house, and Danyluk even did the mortgage for them.
“Every time they think about money,” Danyluk says, “they’re thinking about what I taught her along the way.”
Parents can also teach their children about good financial practices simply by setting a proper example. If mom and dad show the kids how to save for that trip to Disneyland, the trend will continue with the next generation.
“They can see how it works in the real world,” Danyluk says.
More information about youth banking can be found on Prospera’s website or by calling 1-888-440-4480 to book an appointment.
This article is written by or on behalf of the sponsoring client and does not necessarily reflect the views of Okanagan Edge.
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