Skip to main content

There are some lesson plans that still need to be taught at home.

As children of all ages head back to school, one area that doesn't get covered as well as it should is financial education.

The Globe's Back to School Guide

It has been shown over and over again that there is precious little financial education as part of the core curriculum in almost any grade level - although there have been some baby steps to improve it.

Even at the college or university level - whether in the business schools or professional programs - very little is taught. I earned my MBA, and the only investing course I took at school was an elective. There was almost nothing on insurance, debt, personal taxes, etc. While there has been some progress in some schools, most are still very weak in this area.

So what can a parent do?

I believe that at almost every age, there is an opportunity to teach your children some of the fundamentals of financial management.

Some practical examples would include:

Grades 1 to 3: Helping to pay for items at the cashier. Give your child a $5 or $10 or $20 bill, and ask them to pay and receive change. (I know, nobody pays in cash any more...but maybe on the small stuff...for the kids sake). You can then review what they gave, and what was received back. This not only helps with basic arithmetic, but it helps them to understand that things cost money, and to get a sense for costs.

Grades 4 to 6: Show kids household bills, and pay them along with the kids. Make sure to highlight interest penalties for late payments, and explain how the interest penalties work. It also helps them to better understand what household maintenance really costs.

Grades 7 to 9: Build budgeting discipline by breaking down allowances. Some suggest that there are three buckets. One to spend, one to save, and one to donate. You can determine the percentage breakdown, but give them the freedom and some control to spend their own money and donate money - as long as it is within the budget. (But feel free to nix some purchases - you are still the parent after all!!)

Grades 10 to 12: With their savings, you can help in several ways. This ranges from shopping for the best interest rates on savings accounts or GICs, to setting up a practice investment account through an online brokerage account. When it is their money at stake, they tend to get much more interested.

University/college age: Encourage them to work with you on family budgeting and financial planning. You may not want to open up everything, but the more they understand how you manage your money, the more they will learn. Don't forget to review various forms of insurance with them as well (home, auto, critical illness, life). This is one of the least understood areas of financial services and the more they know, the better equipped they will be.

As a final comment, if you have a financial adviser who you like, don't be afraid to ask them to talk to your older kids. Sometimes hearing from someone other than Mom and Dad can often help get a message through.

Ted Rechtshaffen's Adviser Secrets series:

  • Part 6: Do you want to protect your lender or your family?
  • Part 7: You can be too rich
  • Part 8: Your company pension plan: Demand a great deal
  • Part 9: How taxes affect your financial health
  • Part 10: How much can you afford to give?
  • Part 11: Grownup or child: Who values a dollar more?

Ted Rechtshaffen is president and CEO of TriDelta Financial Partners, a firm that provides independent financial planning advice.