How to Teach Kids About Money and Debt by Planning for SummerMar 28, 2018
Will your family take on debt to fund March break activities? Will you pay off that debt before the summer holidays?
Gen-X parents are carrying the most consumer debt in Canada and are feeling the squeeze of a tight budget. A spending poll from last year showed that parents spent an average of $600 on March break activities and 1/5 of families took on debt to do so. Since March break is right around the corner, parents should take this opportunity to talk with their kids about not only managing spending during spring break, but also looking ahead to summer activities and how to start saving now for those events. Here are some helpful suggestions for parents from our Licensed Insolvency Trustees:
- Teach kids how to make a spending plan– After a long winter, most Canadians want to make the most of their summer vacations and don’t mind splurging to do so. Instead of over-spending, sit down as a family and create a spending plan for summer activities. Ask kids to brainstorm ideas for low-cost vacation destinations or day trips.
- Teach kids the difference between wants and needs – Go over the family budget and speak to your children about necessities such as groceries, housing and utilities vs. entertainment costs and discretionary spending.
- Talk about savings goals – Teach kids to save up their allowance to save up for goals. Teens can take on part-time work in order to fund activities and items outside the family budget or sell unused items to earn money. Watch this video about how to set SMART goals as a family to meet milestones.
- Talk about debt – Talk to your kids about the pros and cons of debt and how you’re taking steps to avoid debt by budgeting, saving or taking stock of your debt options. Older teens can especially benefit from this conversation. Talk about the ways you pay down debt as a family and answer questions honestly. Use the FCAC’s Financial Toolkit to teach teens about proper credit card use.
Start saving now for March break and summer break. Planning ahead means you won’t have to rely on debt to fund your activities when the time comes.