Four ways to launch financially-strong kids

I've been writing a column for the Globe and Mail for almost three years now, and many of my columns are focused on parenting and money. When I first started writing, I thought I'd be focusing on younger children, but as it turns out, there are a ton of financial things to think about when you have older teenagers and young adults.

With the benefit of hindsight and two sons and a stepdaughter, there are certain things that I suggest parents make sure they do with their kids to help set them up for a strong financial future. There's a theme that runs through all of these. I'm a firm believer that exposure and familiarity with something leads to being comfortable with it. Whether that's cooking, taking public transit, going grocery shopping, or talking about money – when it’s familiar, it’s less intimidating. Giving your kids familiarity with money-related things is a gift that they will benefit from throughout their lifetime.

Here are my top four tips for parents with kids approaching or in the teen years.

Get them banking

Say what you want about banks, they are indispensable. Getting the most out of your bank means asking questions and advocating for yourself. So get your kids banking early. This starts with opening an account when they are somewhere around age 10. Take them to the bank, and have them talk to the person there. Let them take the lead as much as they are able. I

f they have any trouble with their bank account, as my kids did when they lost their debit card and someone else used their account, have them make the call to customer service at their bank. Sit with them and be a coach and a guide, but let them do most of the talking to resolve the problem. Help them see that bank employees are not intimidating and that they should never be afraid to ask question and stand up for themselves. As adults, they will be more willing to pick up the phone or go into their branch and get information that can make a real difference in their financial lives.

Talk about what life costs

Many people feel that talking about money is taboo and that’s a shame.  I encourage you to be as open as you can be with your kids about how much money you earn and how much things cost. Kids have no perspective without the bigger picture.

In having these conversations, you're also teaching them that money is something that people should discuss. This will help them in their relationships as they get older, so that they can comfortably talk about money with their partner. Talking openly about money with friends and family can also lead to better outcomes; people tend to share their own experiences, and can pass along helpful information and tips. These conversations can also help us feel less alone if we are worried about our financial situation. As with many things in life, many people are having the same experience as we are, and this can be very comforting.

Talk to your kids, too, about how you make big financial decisions in your life. Describing your thought process will help them later on when they need to make their own decisions. They will learn that money decisions need to be well thought out, and should not be made on impulse.

Make them buy their own stuff 

There's a ton of advice out there that says that you should give your kids an allowance and help them with figuring out how much to save and how much to spend. This is great advice and it seems nice and easy - but sometimes it's not. There have been times with my kids when it was really hard to say no when they asked me to buy them something instead of using their own money. The amount of money they made at their jobs was a fraction of what I was making, and a purchase that was a big deal for them was really not difficult for me. But the value of the learning they received from having to fund most of their discretionary purchases was huge.

Each parent needs to make their own decision about how much money they're going to give their kids and how much they expect the kids to fund themselves. While this initially starts up with very small purchases like Pokemon cards, it quickly escalates to things like Nike running shoes, Xbox consoles, and college and university costs. For those of you parents out there who have older kids, I'll bet there are other examples you can give. Buying a car? A condo? Paying for a wedding?

I think the important thing is that kids understand what things cost and what it means to them to buy it. Feeling the impact of money, leaving their bank account will most certainly help them think twice in their young adult lives and will avoid them spending money frivolously and getting into debt.

Open a TFSA and get them started with investing when they are 18

To me, this is the most valuable financial lesson of all. Many people never learn how to invest properly, and this can mean years of missed opportunity. Unfortunately, it's also probably difficult for many people to help their kids get invested. I understand. While I technically know the steps to change the tire on my car, I have never actually done it, and would not be able to pass this information along to my children with any authority or certainty. However, I know that this is a skill my kids should learn, and so I need to help them find a way to learn it (although they haven't yet).

When it comes to investing, if you don't have the expertise, find someone who does. This could be a friend or family member who can teach them how to set up an account with an online brokerage and buy their first ETFs. Or maybe this is something that you can learn together by reading information online and exploring different online brokerages.

The power of time and compounding when it comes to investing is massive. Getting your kids started when they're 18 will be something that they will thank you for throughout their lifetime.

Even though I am a financial planner and have been in the financial industry my entire adult life, I have not done all of these things properly with my kids. These four tasks are what we’d call a "stretch goal". Don’t aim for perfection – any kind of financial education is better than none.