Children 6-11 years old
"Putting something away is an invaluable experience and can set children up for success by teaching the basics of banking and saving," says Susan De Luca, a Royal Bank of Canada (RBC) branch manager.
Many parents choose to open joint accounts, but it isn’t necessary – your kids can open accounts in their own names. De Luca suggests looking into an account specifically designed for a young age group. At RBC, for example, the Leo Young Saver’s Account has no monthly fees. Ask the teller to give your child a step-by-step demonstration on depositing money, from a little change in a piggy bank to a birthday cheque from Grandma.
Don’t forget ID. Even children have to bring along two pieces of identification, which can be a birth certificate, SIN card, Canadian citizenship card or passport. If a parent is signing on to the account, only one piece of ID is needed for the child.
Children and teens 12-16
Let's say your teen is an avid snowboarder and his dream board is on sale. The item isn’t going to stick around and yet he doesn’t have enough money saved to buy it. What to do? Introduce the concept of a mock credit card so your son learns how to use credit responsibly. Kelley Keehn, a Canadian investment expert and author, offers these tips in her book The Prosperity Factor for Kids (Insomniac, 2007, $21.95).
1. Sit down with your teen and discuss the concept of credit cards: how they work and why consumers use them.
2. Determine an acceptable credit limit that you are prepared to extend to your teen. It might be as low as $50 or as high as $1,000.
3. Set rules for using and repaying this credit; for example, your teen has a $500 limit and has to pay back a minimum of $50 each month.
4. Outline the consequences for not paying back the money in the agreed time, such as suspending credit altogether and/or charging interest.
5. Draft a document that outlines these terms and have your teen sign it.
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• Do your kids know the value of money?
• Teach teens to spend and save responsibly
• What to do with an inheritance