If your child is attending school in Canada, chances are they are learning about the basics of money. That's because school boards across the country recognize the importance of teaching children financial literacy and are making it part of their curriculum.
In Ontario, for example, financial literacy concepts are integrated into math lessons starting in Grade 1, where children learn about banknotes and coins and their value. As you progress through the upper grades, you will learn about different ways to pay for things, how to differentiate between wants and needs, and how to compare prices to determine if something is good value.
In middle school, teachers outline different types of financial goals and how to achieve them. Children will learn about how interest rates affect their earnings, including the cost of borrowing on credit cards and mortgages. Teachers consider budgeting and saving, and children are asked to put together a sample budget to demonstrate they understand the concept of living within their means.
This is all a step in the right financial direction, but if there's room for one more essential topic, it should be investing. Investing is an important component of financial planning, but it's widely misunderstood.
Young people today are very interested in investing, and they should be. Saving without investing can make it harder to achieve big financial goals like retirement. That's because investing allows your savings to keep pace with inflation. Everyone who has savings must be investing it in some way.
The rise of social media and finfluencers, as well as the popularity of online brokers that skyrocketed during the pandemic, have made it easier for young people to invest. If you do it right, it can have good results, but if you don't do it right, it can have bad results. correct knowledge.
There is no shortage of investment information available online. The key is to discern what is good advice and what is terrible advice. This can be difficult to spot, and unfortunately, bad advice can be made more appealing because it comes with the temptation to make a quick buck.
People who jump into investing without understanding what they're doing often try to time the market by buying and selling stocks frequently, get caught up in the hype of a new hot investment, or invest too much money in individual stocks. You may place a bet. This often ends in bad results.
A certain level of financial education provides young people with a foundational level of knowledge that helps them actively seek advice from trusted sources and ignore everything else.
The essence of investing is simple. First, we'll introduce the idea of increasing your money pool by adding money to it on a regular basis. This will prepare you to understand the concepts and benefits of saving and investing. As children grow up, they can learn how interest is calculated on guaranteed investment securities and how compound interest works.
Showing children how adding small amounts of money can grow over time can be very motivating and encourage them to start saving and investing early in their working lives. Masu.
Older children can learn about the stock market and the concept of owning shares in a company. It is necessary to explain investment trusts and exchange-traded funds, including their mechanisms and investment methods. Other important topics include the structure of the financial industry, the fees charged, and how to spot fraud and fraud.
Most importantly, teenagers need to understand the concepts of risk and volatility, especially the relationship between risk and return. This will help prevent future pain by teaching them a very important lesson. This means be wary of investments that promise huge returns or get-rich-quick deals.
Slow and steady growth may not be exciting, but watching your portfolio grow certainly is. And kids today are smart enough to understand that.
Anita Bruinsma is a Toronto-based financial coach and parent of two teenage boys.She can be found at Clarity Personal Finance.
