What to Teach Your Kids Now That Will Help With Debt LaterDec 19, 2016
Your children’s financial future is important to you but in our ever-changing world, it’s hard to know how to prepare them so they won’t end up needing help with debt. Housing prices are always increasing, as is student debt in Ontario and across Canada. Kids today need to be prepared to handle carrying debt when they grow up without it becoming unmanageable. Embracing technology can help you set them up for success.
It’s critical for parents to teach kids good money management skills because that’s the only way they will develop important habits. It’s like attending Youth Enterprise Camp, held at Algoma University in the summer. The camp gives kids the chance to design, build, market, and run their own businesses so they get an understanding of the challenges involved and experience the thrill of creating and profiting from their own business. Experiencing the power and excitement of taking responsibility for their money also helps kids learn and will continue to help them for a lifetime.
The digital future
Teaching your children how to budget, track their spending, and manage their money now will also help them deal with new digital payment methods, like Apple Pay, RFID bracelets, and tap-enabled credit cards. Payment methods are changing as Canadians increasingly choose these digital payment methods over cash. Younger generations are using these payment methods and expect to use them for more purchases in the future. Society is increasingly going cashless, with 77 per cent of Canadians preferring to pay by debit or credit card. It’s only reasonable to expect that your kids will be making purchases with their phones, watches, plastic cards, or other devices.
The problem with using these fast, easy digital payment methods is that they also make it easier to lose track of your purchases. One study found that people spend around 30 per cent more when they switch to a tap-enabled credit card. Obviously, it can be very easy to spend more than you have, leading to additional debt, or to use more credit than you can pay back each month, leading to issues with debt control.
There’s an app for that
Luckily, just as technology is making it easier to pay (and spend), it’s making it easier to track spending and manage money. Introducing your children to apps that help them learn the basics of good money management will set them up for a lifetime of being able to manage their debt. Help them choose options that interest them and that they’ll enjoy using. Once they get the hang of using an app, budgeting and tracking their spending will quickly become second nature.
There are many apps for tracking your spending available online. Wally is one option, although it’s only available for iPhones at the moment. Simply put in your expenses and the app will organize them into categories. Photograph your receipts and the app will scan your purchases and fill in your budget so you can track your spending. Mint.com is another popular option.
No one can predict the future. But giving your children the gift of developing good money management skills can make a huge difference in whether they will one day need help with debt. Use their love for technology to their own advantage by exploring personal finance apps, and consider trying one yourself to model the behaviour you want them to learn.
Do you worry that one day your children will need help with debt? What are you doing to prepare them for success? Share on Twitter. #LetsTalkDebt, #BDOdebtrelief