Your kids and money -
Give them the answers they need
Bill Clunas, FMA Investors Group

It's only natural - you want the best for your kids. That's why you prepare them for life by nurturing positive personal and family relationships, encouraging them to pursue a good and relevant education, and helping them develop the skills and abilities they'll need to succeed. And, while it's true money can't buy happiness, you know it's also true that the lack of money can create real problems for them, like being burdened by debt, unable to pay their bills or afford the accommodation they want -- maybe even being unable to have and support a family of their own.

Like it or not, your kids' ability to earn, acquire, and manage money will have a profound effect on their lifestyle and their ability to achieve personal goals. But, when they're equipped with the right knowledge, skills and experience, they will be better able to take control of their financial affairs. How do you give your children the best start on the road to financial freedom? Here are some tips for toddlers to teens:

Bank on it! Kids and piggy banks just seem to go together. Start early by giving them a 'fun' bank they can periodically 'feed' with coins from you and others. As they get a little older, explain the value of money and help them 'graduate' from a piggy bank to a 'real' bank account that makes their money grow even faster through the magic of interest. Most financial institutions have special accounts for children and easy-read literature you can use to teach your kids the value of saving.

Make allowances! As your kids grow, give them an allowance. Explain that it's for a fixed amount - and stick to it! - that way they'll quickly discover they have to make serious choices about when to spend and when to save. You can also acquaint them with the concept of earning by tying part of their allowance to the completion of tasks like taking out the garbage or mowing the lawn.

Shop around for ideas! Most children like to go shopping with their parents. They see it as a magical trip to kingdoms filled with amazing stuff. You can use these trips as an opportunity to point out the cost of all this wonderful 'stuff' and how to make intelligent buying decisions based on 'need' instead of 'want'. It's also a good time to demonstrate how advertisers influence consumers to buy products and services - and how to separate advertising 'hype' from the 'real' value of these products or services and their role - if any - in your personal and family life.

A shopping trip is an ideal time to discuss types of debt and credit - including credit cards, charge accounts, instalment buying and consumer loans - why and how interest is charged and the fact that credit cards tend to carry significantly higher interest rates than personal loans.

Make a 'learning' investment! Consider adding a 'bonus' to your kids' allowance for 'special' work - with the stipulation that they invest the extra money. You might introduce them to mutual funds and how this type of investment steadies long-term growth by 'pooling' the moneys of many investors in order to acquire a wider portfolio of investments.

Make financial planning a family affair! As your children grow, progressively involve them in your family finances. Show them how you budget according to your income, and how to complete a tax return so they'll feel more in control when the time comes to do it on their own.

If you use your computer for money management or personal financial planning, show your kids how they can do the same with their 'finances'. There are also appropriate software products and Internet sites that will help teach your children the value of money or track their spending, savings and investments.

Financial skills are as important as any of the other life skills you teach your kids. By making an investment in time and support now, you'll give them a head start on the road to financial freedom.

Bill Clunas, FMA Investors Group (519) 679-8993

This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.