(Special) - One of the best ways parents can teach their children is by example. Teaching them about money and finances is no different and a great time to do this is on summer break when the family is able to spend more time and experience things together.
In order to pass on correct information to children to prepare them for finances in the real world parents should have some level of financial literacy themselves.
"Before we as parents can start teaching our children we have to be sure that we have good financial habits ourselves," says Layne Choong, a financial adviser with Sun Life Financial in Calgary. "That's why it's really important for people to work with a financial adviser who can help and guide them so we get good advice which we then can pass on to our children."
Canadian students recently ranked third in an international test of financial literacy run by the Organization for Economic Co-operation and Development that measured knowledge about a variety of subject matters among 15-year-olds.
That's a pretty good result. However other studies and reports have shown that Canadians still struggle with some of the basics of good financial literacy and many students are graduating and starting their working lives in debt. Some figures show students who have borrowed money for their education are graduating with $28,000 in debt.
A study last year by the Financial Consumer Agency of Canada found that many Canadians still don't have a firm grasp of their rights and responsibilities when it comes to credit cards and other financial matters. Research pointed to gaps in awareness of financial rights and responsibilities, particularly for youth, those over the age of 55, low-income Canadians and those without a university degree.
In other words, there's still a lot of room for improvement in the level of financial literacy among adults and children in Canada.
Choong recommends parents begin teaching their children as soon as they are able to understand the concept of money, even if it's just having a piggy bank and putting a few coins away in it.
During summer break parents can teach many of the basics of financial management such as budgeting, putting money aside for emergencies or unforeseen events, and the costs associated with of all the various activities and components of a vacation.
"It's important they learn as soon as possible that money doesn't come from nowhere and everything has a cost," Choong says. "Start by sitting down with them and prepare a detailed budget of your vacation, everything from airfare, gas, lodging, food, insurance, entertainment and putting some money aside for an emergency or the unexpected. Sometimes it's all the little things that we tend to ignore than can destroy our budget."
She suggests giving children a budget for their summer vacation and emphasizing that once the money is gone, there's no more to come.
"It's a great way to teach them control — if they blow it too early it's gone," Choong says. "It's a great lesson to learn early in life that can have real value later."
Teaching children financial management and responsibility should be based on parents' knowledge and real world experience, which makes working with a financial adviser vital to ensure parents are passing on good financial habits.
"The value of good financial advice is a unique gift," Choong. "In fact, it's priceless."
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.
Copyright 2017 Talbot Boggs