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Age 12

The one where they get a job.

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Twelve years old is prime time to flex some early entrepreneurial muscle. This is an excellent period to lock in some healthy habits for business and for life.

Start Here.

If your kid is getting ready to hang a shingle as a babysitter, a gardener, or a mod creator, they’re going to have to set a price for their wares. Determining your “worth” (and having to argue for it) can be a real emotional rollercoaster. The sooner you help your kid get comfortable with their own sense of value, the better.

You and your emerging entrepreneur may want to start with some field research. What are the going rates for the jobs being considered? Do other people in the neighborhood get $10/hour to babysit? If so, asking for $30/hour is probably unwise. But so is accepting $3/hour. Research what others are charging, and suggest a rate at the top of that range. If a customer has a lower rate in mind, your kid can offer to meet in the middle.

Establish an hourly minimum wage that feels appropriate, and then talk premiums.

Perhaps there are instances that will call for a top up on the hourly rate, such as extra kids being added to an evening of babysitting, or a lawn mowing job turning into a planting and weed-picking extravaganza.

Keep Going.

Practice conversations about value and hourly rates with your kid. Help them strengthen their language, so a conversation about a wage isn’t a hesitant, uncomfortable negotiation, but an opportunity for your child to declare what they’ve determined their time is worth. What should they do if a parent says no to their requested rate? What should they say if the parents don’t give them the right amount at the end of the night? The more they role play difficult conversations, the more comfortable they’ll feel having them in real life.

Finding a wage that feels right teaches your kid to value their time. And, building self worth in these small, tangible ways can have a valuable impact on the rest of their life. As an adult, they’ll find that a comfort with negotiation opens up unexpected opportunities to ask for what they need, want, and deserve, regardless of which side of the table they’re seated at.

Get This.

Now is a great time to introduce the notion of Opportunity Cost. Opportunity Cost compares the price of doing one thing against the cost of missing out on doing another thing.

Saying yes to a sleepover with friends on a Saturday night may mean saying no to a babysitting job that would earn them money towards a savings goal. Your 12-year-old will probably choose the sleepover 9 times out of 10, but with the idea of Opportunity Cost firmly planted, you may find that over time, they start to consider their tradeoffs.

#age12 #business #Financial Literacy by Age #jobs #money #savings #spending #time #value

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Age 13

Your kid is a teenager. That. Was. Fast.

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You have a fabulous, complicated teen, whose growing autonomy makes you realize they will be living independently in just a few short years. (We realize that nothing feels short right now, including your 13-year-old, who at this point may be taller than you.)

While your kid grows like a weed, show them how to do the same for their money.

Start Here.

Introducing the Rule of 72. Simply put, it’s a formula that calculates how long it will take an investment to double. Doubling their money is a decent way to get your teen to sit up and take notice.

Here’s the Rule, which is actually one of the best math equations around:

72 ÷ Your Expected Interest Rate = The Number of Years for Your Money to Double.

Let’s put this into action. Try the Rule of 72 with 1% and you see pretty quickly why it pays to prioritize investing over saving for the long term.

At 1% interest, it takes 72 years for money to double (72 ÷ 1 = 72)
At 3% interest, it takes 24 years for money to double (72 ÷ 3 = 24)
At 9% interest, it takes 8 years for money to double (72 ÷ 9 = 8)

Keep Going.

As your kid’s financial literacy increases and they learn more about saving and investing, they’re likely to start thinking a little more about their spending. Maybe the $7 after-school Frappuccino takes a backseat to something less pricey, and the $3 they’ve just saved gets invested.

And, hey, we get it — even monks appreciate a decent caramel frap now and then. This isn’t about doing without. This is about your kid starting to understand the power they can have over their money, and what this starts to mean over time.

Get This.

There’s a lot of talk in financial literacy about paying yourself first. The simple rule of thumb is that 15% of all money that comes in should go into investments. As an adult, 15% can feel impossible. As a 13-year-old, 15% can feel like a habit. Start it now.

#age13 #Financial Literacy by Age #frappuccino #habits #investing #money #savings #spending

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Age 14

Time to get real about stocks.

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By 14, kids have hopefully learned the lesson that making money takes discipline and hard work. Hahahaha. Actually, they’ve learned that making money requires a TikTok channel and an influencer contract. NO MATTER where your 14-year-old is at in their journey, this lesson will ensure that even if your kid thinks making money is easy, they can still keep their “easy money” working hard.

Start Here.

Here’s the math:

$20 a week saved over 35 years, will net you $36,400.

$20 a week invested over 35 years can build a portfolio of about $290K.

Investing over time is considered one of the most reliable and consistent ways to build wealth. So, let’s get real about it.

Keep Going.

An Arizona State University study examined the 26,000 stocks traded on U.S. exchanges in the last 100 years.

Here are the results:

1,000 stocks account for all profits
86 stocks account for half of all gains
The average stock has traded for seven years and lost money.

Get This.

Excuuuse me?! Do not panic. Those numbers need some serious context!

Wealthie accounts focus on the long term, because in the history of the markets, over a 20-year period, stock markets have always gone up.

History also shows that diversification is key. To boost the odds of holding at least one (or part of one) of those 1,000 winning stocks in a portfolio, it’s helpful to have exposure to a lot of them.

Exchange-Traded Funds — ETFs — are one way to get broad market exposure and diversification. These are investments that trade on an exchange, like regular stocks. They’re funds made up of little slices of multiple stocks that move with the market.

If you’d like to learn more about ETFs, great news: your 14-year-old owns one! You can check on your ETF by logging into your investment account.

#age14 #ETFs #Financial Literacy by Age #investing #money #saving #social media #stocks #tiktok

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Age 15

Adulting 101.

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Your 15-year-old’s life is starting to get hectic. With the demands of high school ramping up, university or college looming in the not-so-distance, and a busier social life, your kid may be interested in making some money of their own. It’s a great time for a part-time or summer job, and an excellent time to build the skills for both.

Start Here.

First though, value. At 15 — with pressure to fit in AND grow up — understanding value can get complicated. This is the age when clothing and taste can start to dictate acceptance. Your kid may want money to buy whatever they’re seeing around them at school, and while they can do what they like with their money, it literally pays to get clear about a few things.

As your kid’s thinking about where to work and what to do with their time, find ways to encourage them to look at what they value in their life. Whatever the answers — family, pets, friends, trips, home, the environment, their Xbox — how many of the items on their list cost money?

It’s an obvious takeaway, but one that can use a refresher from time to time. Money doesn’t always equal value.

Translate that into the workforce, and choosing a job you love over one that pays more, for example, might connect value to your values. Similarly, the tradeoff of a lower salary for work you care about (and actually enjoy), or a healthier life balance, may not feel like a tradeoff at all.

Money is a tool, not an end point. Instill this in your 15-year-old, and you’ll give them one of the most valuable guides to life.

Get This.

Sitting down with your kid to talk about how to write a CV, fill out an application form, and ace a job interview are skills that will benefit them for decades. And once they’ve gotten the job (thanks to your excellent tutelage), prepare them for the deductions they’ll see on their pay cheques. They can come as a big surprise. Your kid may think working 10 hours at $10/hour may net them $100. Alas, as we wise, experienced ones know, it does not.

Research shows that students who work more than 15 hours a week are more likely to drop out of high school, so try to make that the max. Your kid may have to learn how to set boundaries with a boss who’s asking for more time. It’s good practice for a healthy work/life balance. Working is good. But so is not working. Learning how to healthily hit the balance is key to happier living.

Keep Going.

While it’s tempting to help them get out of bed to actually get to their jobs, experts agree that you pretty much have to leave your teen to it, or risk enabling bad habits. Agony, we know (but so is a world filled with 20-somethings who need their parents as an alarm clock). Let them make mistakes. Let them be late for work or double book themselves, so they can learn the consequences. As always, be a guide, offer advice, and help them when they need it. But let them also learn about adulting on their own.

#age15 #Financial Literacy by Age #interviews #investing #job #money #saving #stocks #summer jobs #value #work

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Age 16

The one where they get a car.

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Not every family owns a car, and not every kid is ready to get behind the wheel. But in most places in the U.S. and Canada, 16 is the magical age when the person who was once your baby is legally allowed to drive.

We are as frightened by this prospect as you are.

Start Here.

Let’s start with the budgeting piece. If your 16-year-old is cutting out Aston-Martin pics for their vision board it’s a great time to remind them that at no point should transportation ever take up more than about 15% of a monthly budget.

Get This.

If your kid is vying to borrow the family car, leverage the teaching moments for all they’re worth.

Charge them for car insurance. Your kid is a new driver and, let’s face it, you’ll think they’re a menace behind the wheel until they’re 50. Charge them insurance to help get them accustomed to costs associated with owning your ride, to insure your peace of mind, and to help ease the sting of your premiums going up now that you have a teen driver in the house.
How much do you spend for gas and routine maintenance? Will your teen pitch in for gas?
How much are your monthly car payments? Do you own or lease, and what are the advantages of each? If you have a car loan, how much will you end up paying in interest over the course of the loan? Maybe your teen can cover the interest.

Keep Going.

There are a lot of household costs that start to pile up at 16 — food for ravenous appetites, higher insurance costs, clothes and sporting equipment. If you think you’re doing your teen a favour by shouldering it all, Jerald G. Bachman says maybe not.

Bachman, a University of Michigan professor and an expert on behavior during the transition to adulthood cautions that kids who have cash to splash around on non-essentials while parents cover the basics can fall prey to “premature affluence”. It’s an inaccurate experience of the world that can really chip away at a young person’s financial literacy. Financial literacy actually deteriorates if it’s not put into practice, so get practicing. Have your teen find ways to contribute to household finances, their sports equipment, or their investment account.

We particularly like Option Three.

#age16 #budget #economics #Financial Literacy #Financial Literacy by Age #interest #investing #money #parents #spending #Teens

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Age 17

Your birds are getting ready to fly.

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Your kid is probably eyeing the real world with envy, counting the days to living the dream of renting a split bachelor in a 12-story walk-up. Use this time to casually LARP their future, so that once they’re out on their own, they’ve given life on their own some thought.

Start Here.

Budget. If you and your kid dislike this word as much as we do, find something that feels more motivating and empowering. They’re stepping into a powerful period of possibility in their lives. Their view of money should reflect that, even while they’re living on very little.

A Spending Plan keeps the focus on planning for spending, rather than restricting it.
A Financial Plan can include plans for the future as well as the present. Bonus: It sounds fancy.
An Expense Tracker can help track money going out. So, as your teenager gets used to new bills and financial realities, they’re less likely to be eating Cup Noodles at the end of every month for the rest of their youth.

Keep Going.

What are the things they’ll need to pay for once they’re on their own? Maybe they’ve forgotten to include the gas bill, the electric bill, or the grocery bills, in their back-of-the-napkin calculation of the rent they can afford. Help your kid establish a spending plan, and get focused on the things that are easiest to forget – bills, a rainy day fund, lease payments, car insurance or a subway pass, and food/vet bills for a pet if they plan to adopt one. (Build this last item into your budget too, in the event said pet is dropped off on your doorstep in a basket…)

It’s a good time to talk about short- versus long-term financial planning. Your kid’s Wealthie account, for example, is a long-term investment. But, if they’ll soon need money for rent and other short-term expenses, they may want to consider “money market” investments such as GICs and term deposits to provide some light interest.

Get This.

Which brings us to life itself. Humans adapt. When we make more (or less) money, we tend to expand or shrink into our new circumstances accordingly. Setting a benchmark of up to 15% as a constant investment goal will help to keep things on the level. Of course, life creeps up.

It’s a low-stakes time to lay down some gentle boundaries that will help your kid understand how life’s going to change once they’re living on their own. Walk through what might happen if the semester-long budget, for example, gets blown in week two.

Are they setting money aside for spending? Is it a good time to pick up a gig for a few extra bucks? If you’re having these conversations with your kid, then we’re confident they’re a financially literate wizard at 17.

Now, let them have the experience of walking into a job interview and crushing it.

#age17 #budget #economics #Financial Literacy #Financial Literacy by Age #interest #investing #money #parents #spending #Teens

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Age 18

Wherever you are, this is a milestone. Congratulations.

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Let’s take a moment, because friend, you have ARRIVED! Maybe you’ve listed the bunk bed and you’re turning their room into an art studio. Maybe you’re trying to bribe your kid into living with you for the rest of their life. Wherever you are, this is a milestone. Congratulations.

Take credit for your epic parenting, and now immediately teach your 18-year-old the basics of credit.

Start Here.

Credit can be confusing for a young person. If it’s not explained well and early, it’s the kind of thing that can spiral, fast. Have a conversation with your kid about credit now, so you can quietly take credit for their good habits later.

Explain it. Credit is the ability to borrow money now with the promise/guarantee you’ll pay it back later. Credit isn’t free. It comes with interest, and that interest is usually determined by how good your kid’s credit is. We’ve really come full circle.

Interest is the cost of using credit. Interest is great when it’s helping to grow your savings. It’s a drag when it’s working on your debt.

Credit cards can help keep your kids safer while shopping online. They are helpful in an emergency. Aaaand, they can give young adults a false and immediate sense of wealth.

Let’s face it, credit cards can feel like free money. So, some helpful ground rules to share with your 18-year-old:

#1: If you can’t afford it with cash, you can’t afford it on credit.

#2: Pay your card in full and on time, every month.

#3: There are no other rules. Except for this one: don’t spend more than 30% of the maximum your card allows. Everrrrr.

Now there are no other rules.

Keep Going.

Used properly, a credit card helps to build good credit, and a good credit score makes life easier.

Credit scores are considered in the approval of loans, phone contracts, rental applications, mortgages, insurance. They are looked at by employers. They impact the interest rates offered on loans and car leases. A low credit score, or no credit score at all, makes life harder and, often, more expensive.

Get This.

Credit cards make it easy to spend money. Studies have shown that people will spend up to 100% more when they buy with credit and not cash.

Remember the Rule of 72 we covered when your kid was 13? Well, The Rule works for debt too. With the average credit card interest rate hovering at around 17 percent, it takes a credit card company only four years to double the money they’re squeezing from your kid.

So, choose wisely! There are lots of good credit cards for first time users. Sites like creditcards.com and ratehub.ca will direct your 18-year-old to low interest or cashback cards with no annual fees. Some cards will promise free perks and rewards. Before your kid inhales the air miles, have them look up the APR (the Annual Percentage Rate) and the annual fee on each of the cards they’re considering. These are two separate fees. And there are more. When it comes to credit cards, free… is relative.

But speaking of free, take a look at your glorious 18-year-old! They’re ready for the world and, thanks to your nudges and planning, they’ve got a nest egg that’s ready for them.

Take a moment to look at what you’ve built together. And then put the fear of a mother into them and ensure that they NEVER TOUCH THAT MONEY!!! Keep it growing.

We’re kidding. Sort of. This is the beginning of the rest of their lives. And now, thanks to you, this, and them, they’re ready for anything.

XO.

#age18 #credit #Financial Literacy #Financial Literacy by Age #interest #investing #money #parents #spending #Teens