The Importance of Teaching Financial Literacy

By Keshiv Kaushal ’18

Our society is undergoing rapid changes with rising real estate prices, the changing dynamics of the workforce, and the rise of the gig economy. All of this is forcing people to come to terms with harsh realities regarding home ownership and retirement. The days of buying a house at age 25 and retiring when you’re 65 are long gone. Canadian household debt has reached an all-time high, and with new changes to the mortgage lending policies in Canada, more and more Canadians are getting turned away from banks and are turning to non-bank lenders with higher interest rates to qualify.

This demonstrates how crucial it is to ensure that children are financially literate from a young age. When we teach our kids financial literacy, we give them a toolbox on how to deal with the world around them. When society was cash-based, it was very easy for people to track the inflow and outflow of their money. However, with the extensive use of credit and debit cards as well as mobile payment systems like Apple Pay, it is now deceptively easy to lose track of your spending. Additionally, teaching kids how to budget and save is crucial to their eventual financial success and freedom. Especially when people are in the early stages of a career, it can be very easy to delay saving, but the sooner you get your money working for you, the better.

The most important financial literacy topics are saving, budgeting, spending, investing, borrowing and banking. So, how do we help children learn financial literacy? In my experience, it is all about infusing teachable moments into their lives. Here are three ideas:

#1: Make it fun: For example, the Game of Life (a board game) is a fantastic way to teach kids concepts like earning power, opportunity cost, saving for retirement, selecting jobs conducive with your lifestyle, etc.

#2: Make it real: A great way to teach your kids about spending and budgeting is to sit down with them and show them how much they cost. When you lay out all their expenses (tuition, food, housing, clothing, etc.) and compare it to their average expected income, kids gain a real understanding of the value of money.

#3: Make it competitive: For kids in middle or upper school, a virtual portfolio competition among the family is a great way to stoke the competitive spirit while teaching the kids the fundamentals of stock market investing. I recommend sites like Investopedia or MarketWatch for learning the basics of investing.

Crescent School alumnus Keshiv Kaushal is studying commerce at Queen’s University. Last summer, he and Ryan Cheng ’18 developed and co-led the financial literacy camp for boys and girls aged 10 to 14 as part of the Crescent Camps program.