To my son, money seems limitless, and he believes it can fulfill all his desires. As he approaches 8 years old, it’s been a challenge to help him grasp the concept of money and impart important financial lessons. Though we’re witnessing gradual progress, it often feels like taking one step forward only to encounter two steps back.

So how do you navigate this complex world of money and kids, and how do you explain it in basic terms, at a time when they are still too young to understand most of it? Through personal experience and observing other family and friends, I have come to appreciate the following tips and lessons for helping your young kids understand, grasp and appreciate the concept of money and finances.

Start early

Don’t postpone this process until they’re already 8 or 9 years old, as they may become overly dependent or spoiled by then. Instead, begin discussing these concepts with them during their Junior Kindergarten (JK) or Senior Kindergarten (SK) years, or even in Grade 1. While you could potentially start earlier, at such a young age, the information might not stick. Keep in mind that every child is unique, and some might grasp the concept at an earlier age.

Show with example

Telling them is one thing, but demonstrating with real examples is even more effective. For instance, if they’re requesting a toy that costs $100 or more, explain that while you’ll try your best to purchase it, it would require a full day’s salary—equivalent to 8 hours of hard work—to save up for it. Attaching a time value to the cost can make the message more relatable. Additionally, you can share stories of other families, their professions, and the effort they invest in earning a living to provide for their needs. In other words, connect spending with the effort required to earn money.

Teach the importance of priorities

Your young kids have to know what is the priorities of a household: food, shelter and then come the non-essentials and wants such as toys, electronics, junk food etc. By reminding them about these on a regular basis, you help them understand how life works and that certain things we take for granted – food and shelter – are not free and we have to save and pay for them. In fact, I sometimes make it a habit to remind my son about how lucky we are to have money to pay for our house during bad weather days such as rain or thunderstorms etc. I tell him that because we work hard and save, we get to enjoy this house we live in, but some other people are not so lucky or haven’t been responsible enough with their money to have housing or even food.

Household errands for money

Assign them tasks suitable for their age and reward them upon completion. This introduces the notion of earning money through effort. Beyond that, it imparts the understanding of the time and dedication required for work, and that earnings are a result of genuine labor. This crucial lesson mirrors the realities of life, demonstrating that money is acquired through diligence and exertion.

Their own Piggy Bank

A piggy bank holds significant value for a child as it serves as an initial introduction to money management and saving. It teaches the importance of setting aside money for future needs or wants, promoting delayed gratification and responsible decision-making. The act of depositing coins and bills fosters a sense of accomplishment and ownership, empowering them to watch their savings grow. Additionally, it can initiate conversations about financial responsibility, setting goals, and the value of hard work. Overall, a piggy bank instills foundational lessons about money that can shape a child’s financial habits and attitudes as they grow. If you want to add a twist to this, consider introducing a piggy bank. Regularly contribute to it and even promise extra money when they complete tasks around the house. But here’s the catch: when the piggy bank is full and it’s time to open it, observe their reaction if you playfully—though seemingly serious—propose using some or all of the saved money to buy something for yourself, the household, or the family car. It’s a win-win scenario: if they agree, you’re dealing with an exceptionally generous child; if they firmly reject the idea, congratulations on raising a child who comprehends the value of money.

Encourage Charity

Last but not least, introduce the topic of charity to them, and show real examples of helping. For example, if you see someone on the side of the street asking for money, give money when your kid is with you and give a small lesson about why it is important to help others. Also important to relay the importance of saving money in order to help needy people like the homeless, disable or those less fortunate than us.

In conclusion, guiding children to comprehend the value of money is a vital parental responsibility. Despite the challenges that arise, the journey is a significant investment in their future financial well-being. Starting early, using practical examples, teaching the significance of priorities, involving them in household tasks for earnings, and introducing the concept of a piggy bank all contribute to their financial education. Furthermore, encouraging acts of charity instills a sense of empathy and responsibility, fostering a well-rounded understanding of money’s role in both personal growth and contributing positively to society. While the road may be riddled with ups and downs, these efforts lay the foundation for a solid financial outlook that will serve them well throughout their lives.

Are you struggling with gift ideas for that kid who has everything already, at least materially speaking? have you already bought every LEGO set out there? If you have more than a few kids in the family, be it your own, nieces, nephews or your friends’ kids etc, then chances are you have already bought all there is and it is now time to get them something different, something they will not only find interesting and stimulating, but will be like a gift that keeps on giving for years to come. The idea is to give them something that inspires, promotes creativity and learning, while also giving them something fun to play with. The idea is not to bore the kid to death with something they will neither enjoy or have any clue what it even is. Here are some ideas for you to consider and make your Christmas shipping a bit more stress-free this year:

Financial

Let us start with the easiest one: gift card to a book store or other stores where they can buy something other than toys. My preference would be for a book store to get them started or more interested in reading.

Cash rewards are the next obvious choice, where you can either give cash in an envelope, write a check, or even inquire about making a cash gift towards a kids’ existing education savings account (RESP in Canada, or 529 Plan in the U.S) . In fact, we strongly encourage the latter, since it will help with their education, while allowing it to compound in the process.

Want to stay with the theme of financial rewards while making it more fun? how about a see-through piggy bank, where you get them started by putting couple of bills and coins and gifting it to them with a head-start. You can make it fun and label it with the year you gift it to them (2021-???) and let them and the parent (if they are not your own kids) have a time saving goal in mind. In fact, you can go an extra step and promise to contribute to this bank every year for Christmas or their birthday. Giving them a clear (see-through) type of piggy jar will make things more and motivate them more as they see the money pile up. This as long as they are not short on patience and decide to open it the next time they want to buy something that their parents will not pay for!

And last, and this is more suitable for your immediate kids and family, you can even consider purchasing stocks on their behalf (since there is an age restriction on who can open an investment account and own stocks) . The idea is that they are young and the power of compounding will be put to maximum efficiency. If you give them even one stock of a reputable blue chip stock a year, from the time they are 1 through 12, these could compound tremendously and be worth a lot more by the time they turn 18.

Creativity

Most of the toys below, if not all, require no charging, batteries or involve much in the way of electronics. We already have enough of these in our lives with all the iPads, tablets etc., and the idea here is to be different. Another common theme below is the commonality of STEM-based functionality of these toys. The earlier you start engaging them with math, science and creativity, the better for their academic growth

Let us start with the easiest gift you can give them, one that won’t cost a lot either: a globe. This will help them learn about geography, explore new places, and make connections between places and other landmarks.

You can’t go wrong with a telescope either: depending on their age, you can start them with a basic one ($40-50) or go a bit more advanced where they can see things more clearly, thus stimulating their astronomical curiosity and interest. A future astronaut’s first steps towards that future is having a simple telescope.

Jigsaw Puzzles (250-500 pieces) is another great option, where it can not only be a fun group activity, it can also help with visual-spatial reasoning, as well as focus and concentration. Speaking of the latter, in our hyper-distracted lives today, anything that can teach a kid focus and concentration is a great thing!

Wooden building blocks may overlap with LEGO sets, but these can be different in that they are bigger and can make larger shapes, buildings and other ideas that mimic how an engineer or an architect would think

Finally, another favourite of ours are Magna-Tiles construction toy system. The pieces are plastic tiles of varying shapes that snap together magnetically, allowing users to build various geometric structures. Given their different shapes and the many ways you can piece them together, they are great for stimulating creativity and allowing the kids to approach an idea from different angles (how many ways can you build something?)

Experiences

While a child may be more thrilled with a toy, the luxury and enjoyment can only last for so long. With experiences on the other hand, it could give them a lifelong lesson and experience, or something they will remember and cherish for a long time. Here are some ideas to consider

Purchase them a pass to a program or camp such as coding classes, sports etc. For example, Code Ninjas is a popular kids coding business, where you start kids early with coding and programming, in a fun and class environment. Alternatively, you can buy them a pass to a camp or other sports programs. Karate, Soccer, Swimming and Volleyball are some of the most popular ones, but you can always check with the parents or he kids themselves on what they like. Check your local community centre for upcoming programs and activities.

Or make them feel responsible and empowered, by buying a gift card to their local grocery store, where they can take the parents for grocery shopping and pay for it themselves, giving them a huge lesson about money, accountability and being responsible and caring for others.

Last, if the kid has more altruistic nature and intentions, enable them to donate to charity or help in some other ways. Again, the experience and the lesson will be lifelong and extremely beneficial for their character-building.

At the end of the day, it may take time to find the perfect gift, or at least one that you know will put a smile on a kid’s face, but more importantly, keep in mind the long term implications for what it will mean for them. You want to strike a balance between the kid being happy with their gift in the immediate, while getting tremendous value in the long term, in terms of growth, learning and life lessons. And remember, these ideas can come in handy for a kid’s birthday as well.

As a newly wed couple, me and the wife had to sit down (literally) and discuss a new family budget together. Each had a budget already, but now that we are married, it was time to coordinate and combine it into one. But being from two different schools of thought on budgeting and how to save and spend, the negotiation process wasn’t easy! We had to settle a lot of differences. As a single girl with not a lot of financial obligations, she was used to spending a lot of money and save little. Things had to change, now that she is married.

One of the things I suggested to my wife is to have a motto for our life and how we work and live it. It is three words short. These three words could help us live the rest of our lives together, happily, fruitfully and hopefully with little conflicts.

“Work . Save . Play”

And yes, they are in order, and can’t be re-arranged.

It all starts with work. If we don’t work and have jobs, we can’t do the next thing, ‘saving.’

Saving should be an essential component of every family budget. If you want to be able to afford life and the things you want and need, you have to save now and always. Which brings us to the third part in our motto: ‘Play’

Most of you probably know what we mean by ‘Play.’ It is the ability to enjoy life with no regrets. Be it traveling, partying, eating out, buying things you have always wanted etc.  If you have taken care of saving money already, you will be able to play and enjoy life to the fullest. Just remember, just because you have already taken care of the ‘saving’ part doesn’t mean you go crazy and spend all the money that is left (based on one pay cycle.)

We have seen people re-arrange our motto in many different ways. Whether it is to just play and do nothing else. Working and playing, and saving nothing in the process. Or even playing first and saving later. Different individuals and families may have different needs and circumstances. But as a core basic principle, saving should come before playing, otherwise you risk spending all your money and having nothing left for saving. And if you have no savings, you can’t play and enjoy life to the fullest.

And remember, as we have often preached, the sooner you start saving, the sooner you can start enjoying what life has to offer. More importantly, don’t forget to enjoy life and not spend all your time working and saving money.  As long as you remember to save before you spend!

It has been some time since I last wrote anything here and that is due to big changes that happened in my life recently : I am now a married man!

My wedding was in mid August and that was followed by an exciting and lovely honeymoon in Europe, which included 4 day stay in Rome and a Mediterranean cruise that took us through Italy, France and Spain!

Suffice it to say, the last two months have been very busy, hectic, exciting and fun.

My wedding and honeymoon taught me a lot of new things about the importance of saving and budgeting. Valuable lessons that will make me appreciate these two financial concepts even more, for the rest of my life. I will try to share some of these valuable lessons here while expanding on the rest in future blog entries.

Wedding Finances

As someone whose ethnic background are all about big weddings, I had to go with the flow and plan a relatively big wedding.  It cost me a fortune, but it was a great wedding and we had a blast. Although we didn’t go cheap, we still budgeted and saved and at the end we didn’t lose any money, which we are very thankful for.  I learnt that while planning a wedding, you tend to not care much about small expenses, since you are already paying big amounts for everything else.  But that shouldn’t be the case.  These small expenses can add up to thousands and they all take from your bottom-line.  And this being a wedding-a once-in-a-lifetime-event-you should enjoy the day as well as the people and not worry about how much money you will lose or even profit.  Worry about having a great time first and the rest will take care of itself.  At the end of the day, financing the wedding was a lot easier thanks to all my savings which I started some 2 years ago.  If you know you will get married eventually, why not start saving from now?

Honeymoon Finances

Thanks to my wife, our travel agent and lots of research, we were able to have a great and amazing honeymoon in Europe without having to worry about whether we can afford it or not. And here again, the key was our savings which we started 6 months before our honeymoon.  While on honeymoon, you are bound to run into things that you will want to buy and since it is your honeymoon, there is nothing wrong with spending money on these special items and moments.  But you have to know when to say no, otherwise you could quickly overspend your budget before you have even gone through half of your honeymoon.  Resist the temptation to just buy anything that comes your way, even if it is not available in your own country.  First, ask yourself if you really need that item? and if you do, is it worth it, given the price? and last, ask yourself if you can wait to find it cheaper somewhere else?

The best feeling is to enjoy your honeymoon and come back home with some money in your pocket, which you managed to save despite all the enjoyment and buying you did.  This money was spared thanks to our ability to stick to our budget and not wasting money on useless things.

I so enjoyed our Rome stay and European cruise that I would like to do it again soon. But for that to happen, we will need to start saving money from now. Well, at least we have one more good reason to save money and not spend it on useless things.

Many of us have been faced with this work dilemma: you already have a job that is close to home and pays OK. In other words, it is a job that may not make you very wealthy any time soon but it also gives you a stress-free comfortable life, where you can spend more quality time with family and friends. Then you come across another job opportunity that pays much better than your current job (say 10-30% more) but it is far from where you live and you would have to sacrifice up to an extra 2 hours in commute daily, time that you would otherwise spend with your family.

Assuming all other things are equal, should you take the new job? Ia it all about money or should other things come into play in making your decision? Here are some things to consider to help you make a decision on which job to take or keep:

Single person vs. Family

It make a big difference  whether you are single and with no family commitments, or have a family (spouse and kids).  Here is the tricky part: while a single person is more capable of taking the new more distant job, at the same time, he or she is probably less in need of money compared to the person with a family.  At the same time, the person with a family needs to spend more time with their family, something the single person probably doesn’t need to worry about a lot.

So, you can either take the extra money and end up spending less time with family or keep the current job, with less money, but have much more time with family.

Money spent on gas, commuting back and fourth

There are other things to consider: money spent on commuting back and fourth.  This could take a big chunk out of your budget. In fact, it could be so substantial-given the current high gas prices-that any extra income you make from the new job, will not be very significant after all. Not to mention, as you drive your car to work more and put extra mileage on it, it will need more maintenance (more frequent oil changes, wear-and-tear parts that need replacing etc.) and that will cost even more money.

Tax considerations

You also have to take into consideration that making more money could put you in a higher tax bracket and as a result, end up paying more.

Therefore, after accounting for these extra factors, you will realize that getting the new job-pays more but is a long commute from home-is not really worth it at the end of the day. In

One thing you can consider, if the new job is really worth the future investment, is to try to relocate somewhere that is closer to it. But even then, given the high prices for real estate (in Canada at least) this may not be an easy option.

Suffice it to say, when presented with such a situation, weigh all the factors and don’t just focus on the difference in salary. In our materialistic world today, it may nice to have a lot of money, but at the same time, let us not lose sight of things that matter the most to us: our families, friends and having a good time, away from work.

We all love the smell of a new car or the feeling of moving into a new house. But as  a parent, there is no better feeling than that of having a new baby, especially if it is the first one in the family!

Amid all the excitement and joy of having a new baby, parents often forget one very important aspect which often comes back to hurt them late on in life: that this small and tiny baby will one day grow up and hopefully attend a good post-secondary institution.  We all know how much school costs these days and how much more it will cost in a decade or two from now.

Start saving for him now!

Knowing that school costs a lot these days and will cost a lot more in the future, it is wise to start saving for your new born child before even leaving the hospital! Yes, while still in hospital to deliver the baby, ask your husband to open a new account in the baby’s name (assuming you have picked a name for the newborn) Be sure that this is a high interest saving account, preferably a GIC one, so you can get the maximum interest possible by the time you withdraw the money for him when he reaches adulthood.

RESP and other Registered Education Saving Accounts

In Canada, the government offers the RESP (Registered Education Savings Program) which helps you save for your child’s post-secondary education.  The government, in turn, offers/matches your contributions through the Canada Education Savings Grant and the Canada Learning Bond exclusively to RESP subscribers.  Similar programs are offered in other countries and it is wise to make use of them early on. The earlier you start the better it is for your child’s savings.

Secondary savings options

In addition to the saving methods outlined above, you have other options at your disposal, including something as basic as a piggy bank where you and the family agree to put as much or as little as you can spare in it. Over the years, you can end up with thousands of dollars in there. You can also consider buying stocks in your portfolio for your new-born and vowing not to cash it out until they reach their adulthood which could potentially have multiplied, tripped, quadrupled or more in value by then

Whatever or however you decide to save, the important thing is to start saving as soon as they are born. In fact you can go one step further and do it as soon as the wife is admitted to the hospital or is in labor! The idea is to commit to it from day one and we know day one starts at the hospital.  And don’t make the mistake of assuming they are still too young and that there is enough time to start saving later in life. As long as you start saving early, it doesn’t matter how much you actually set aside for them for now. You can start small and grow your contributions as they get older. Just like you wished you had more money to pay for your school, your kids will thank you for having saved this money for them so they can actually focus on studying and not working two jobs to pay for their school!