Tips for passing financial sense to the next generation

By ATB Wealth 22 February 2023 3 min read

Getting our kids to take an interest in money management and budgeting can be a lot like getting them to do other household tasks—sometimes it’s just easier to do it ourselves. But unlike getting them to take out the trash or tidy their rooms, having early conversations about personal finance can set them up for smart decisions and financial success throughout the course of their life.   

Unfortunately it’s a lesson that continues to be overlooked or just not prioritized, says ATB Wealth’s vice president of private banking and wealth planning, Trent Hamans. “As a society, we have a lot to do to help younger people make good financial decisions. Parents need to allocate time to helping their children build good money habits and behaviours that can last a lifetime.”

As with many areas of child-rearing, it takes a village to do this successfully including immediate family members and professionals. Here’s the part you can play as a parent, caregiver or supportive family member.

Teach them to budget and save

Teaching these skills doesn’t have to be complicated. It can start with something as simple as a birthday present of cash. Families can show kids a balanced approach where they spend some of the money on a toy or experience, but put the rest into a savings account towards a longer-term goal. That might mean holding off on the latest sneakers or iPhone in pursuit of a bigger purchase or investment, like a video game console for younger kids, or a first car or university tuition for teenagers.

“It’s about building a habit of not spending what you get, living below your means and putting your money away for a rainy day,” says Hamans. “Start as early as possible—no age is too young.”

In addition to that, teach them what’s possible with a little discipline. “Some people have amassed large fortunes, not because of high income, but because they lived below their means,” Hamans says. “These habits can help most people do well financially — even if they aren’t part of a high-earning profession.” 

That means practicing what you preach. Remember they’re also watching you and how you spend and save. “There are formal conversations that occur like budgeting, allowances and getting a job, and children also see how their family conducts their own financial house,” says Hamans. “They take in what their parents tell them and absorb how their parents conduct their own financial affairs.”

He also recommends a second option to help sharpen their kids’ financial senses–asking for back-up from the professionals.

Bring in the pros

While we can’t outsource the nightly argument with the kids about whose turn it is to do dishes or take the dog for a walk, when it comes to the money conversation, we can at least get some help.

Between savings accounts, income taxes, bonds and equities and more, it might be hard for both parents and youth to discuss and absorb so much information. Hamans recommends leveraging professionals to accelerate financial well-being, such as a financial advisor.

Today’s financial advisors are educators and coaches as much as they are wealth managers. These professionals help clients better understand their financial outlook and provide a second opinion on personal money beliefs. Parents can also rely on financial advisors to explain personal finance concepts to their children. It’s a great opportunity for parents to get their own personal finances on track while empowering their children at the same time. 

“Get an advisor and have them help mentor the children,” says Hamans. “Clients are not only the mother and father, but they are also the children — many financial advisors welcome the second generation into their office.”

A pair of grandparents sit inside their home with two of their grandchildren smiling and laughing

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