Teaching financial literacy to young people: Why it helps

Did you know that April is Financial Literacy Month? During this month, it's crucial to raise awareness about financial education, especially among young people, who may not receive the same information in schools. For parents of children or teenagers, the importance of financial literacy should not be underestimated. When we instill good financial habits at a young age, we prepare our children for a life of better decision-making and confidence with money.

Here are some ways to approach financial literacy with young people.

Tip #1: Always talk openly about finances

It can sometimes seem a bit taboo, when we avoid talking about finances with our children. For many of us, we knew nothing about our parents' finances, which may have inspired an instinct or a desire to hide them from the next generation.

It can be detrimental to our children to avoid talking about finances. Try to be very open, especially about what we earn, what we have in savings, our retirement plans, and so on. For some families, depending on the circumstances, this can be very awkward or strange, but it's essential for raising independent young people. You want them to have the confidence to be stable and financially secure on their own.

We live in a world where money is part of our daily lives – it's impossible to avoid. Make sure you keep the discussion open, when questions are welcome. It might seem strange, but you want to avoid keeping it "secret" so your children know they can participate in valuable discussions from a young age that help prepare them for adulthood.

Tip #2: Talk to young people about life insurance

Life insurance can be a sensitive topic to discuss with children, especially because they may worry about what happens after their death. It's essential to explain your life insurance policies to your children: what they mean, where the policies are located, and what might happen if a guardian dies unexpectedly. Furthermore, if your children are covered by life insurance policies (i.e., permanent life insurance policies), it's important to explain that this isn't about the death benefit, but rather that they will have coverage for their entire lives. It's about protection, not probability.

Life insurance differs from other insurance policies because a wide variety of policies can fall under the umbrella of "life insurance." These include term life insurance, permanent life insurance, critical illness insurance, disability insurance, comprehensive life insurance, universal life insurance… the list goes on. Discussing this with young people can spark a conversation and reinforce the importance of having a plan to protect loved ones in case of unforeseen events.

If you're still unsure how life insurance can help you, Panda7's life insurance brokers are here to clarify things for you. Speak with our experts whenever you need advice.

Tip #3: Teach them the importance of saving

From a young age, it's important to teach our children that money isn't an infinite resource and that there's a very good reason why we save. These lessons can be difficult if we start teaching our children very young and they're surrounded by friends who always receive lots of birthday presents, Christmas gifts, etc. – and you're the parent who gives a few physical gifts; and a little more towards your savings accounts (for experiences like university or travel later in life).

While it may be difficult at first, your children may develop a greater appreciation for saving as they get older. You can ask your children to contribute to their savings to see the benefits for themselves. Ask them to contribute a certain amount, which you will then multiply and match by a specific percentage and add to their account.

Resources for youth financial literacy

If you are a parent or guardian, you should be the best resource for teaching your children financial literacy. Of course, this won't always be successful, so Panda7 has provided options for additional financial literacy resources used by young people. These may include:

• Money and youth – A financial literacy guide designed to change the way the next generation learns about finance in Canada.
• Managing money and understanding credit for high school students – a free online course that teaches high school students the importance of good money management and the consequences of poor money management.
• Shop online with confidence – an online course that teaches young people that, while technology offers us many conveniences, we must be wise about how we plan to shop online, including looking at seller and buyer ratings, fraudulent activity, and more.
• Government of Canada Financial Literacy Programs – The Government of Canada website also offers a number of educational materials for students and adults to help them improve their financial knowledge and skills.

As you can see, there are many resources available to help support young people's financial literacy, but it all starts with you! We hope these tips have opened your eyes to ways you can teach your children or our youth about the importance of finances and how we can provide them with the skills they need to grow into financially savvy, confident, and informed adults.