Mostly because I have Netflix, don’t really enforce a bedtime and agree that chocolate doughnuts are a fine Sunday breakfast, my eldest niece often likes to sleep over at my place. And while she’s still young enough to think I’m cool, I work hard to be the best possible role model I can be for her – and that includes for money matters.
Though the value of instilling healthy attitudes towards saving and spending is now generally accepted in society at large – several provinces, including Ontario, have or will soon launch financial knowledge classes in primary and secondary school – raising financially savvy children remains basically a family affair. Yes, parents will likely take the lead, but young ones absorb everything around them in those all-important early years and, as a result, aunts, uncles, grandparents and godparents can have a huge impact on the money habits these beloved children will carry with them into adulthood.
Talk to kids about money
On our weekends together, I will often take my niece to a local children’s bookstore. There, I tell her she has $25 to spend. We wander around and read the backs of books, and together we do the math to figure out how many books she can buy. (Yes, we include the tax.) It creates an opportunity to have age-appropriate conversation around money. Your lifestyle or approach to finances might be different from their parents – that’s okay. A diversity of positive money experiences and perspectives can lead to a broader, deeper understanding of the way constructive, practical personal finance works in the real world.
Don’t automatically spoil them
It’s difficult not to splurge and spoil young children: I find myself looking for sparkly silver shoes for my 3-year-old niece because she loves dressing up. I see a new book and I want to buy it for my oldest niece. I have to restrain myself from buying Star Wars-themed shoes for my nieces and nephew.
But don’t fall into the habit of bringing nieces and nephews gifts every time you visit. You want them to be happy that auntie or uncle is here, not conditioned to view you merely as a gift-delivery person. Save gift-giving for birthdays and holidays.
And when you want to give something to the children in your life, think beyond the material: Instead of a new stuffed toy, consider a trip to the zoo or an exploratory trip on public transit.
Adventure and independence?
Now that’s a gift.
Work together towards a financial goal
Does your niece or nephew take part in a school or community fundraiser? Do you have a favorite charity or cause? If so, join forces and use the process not only as a chance to give back, but also as a teachable moment. Help them see the power of money in action, the good they can do for others when they are effective stewards of their own resources, and even how marketing strategies – say, a song or slogan – can get people excited about a cause and boost returns.
Contribute to a savings account with them
Children like putting money in their piggy banks, so why not start a savings account with them? They can put some of any birthday or holiday money you give them into this account, and the 2 of you can track its growth until there’s enough in it for a special item or other reward.
Another option is a registered savings account. Unfortunately, you can’t open a tax-free savings account (TFSA) for children under 18, and while your nieces and nephews don’t have to be 18 to open a registered retirement savings plan (RRSP), they do have to be earning money and filing a tax return. (So keep this option in mind for when they reach high school and get a part-time job.) But you can open a registered education savings plan (RESP) for your niece or nephew at any age – just make sure you co-ordinate with their parents in case they have an RESP in effect already, so you can maximize the grant money that the government provides without exceeding the contribution limit. You could also simply arrange to contribute to that existing plan.
You need to tailor all of this to the individual child, of course. For example, when I asked my niece what she would do if I gave her money, she responded, “I don’t know. Put it in my piggy bank?” My nephew, on the other hand, thought for a moment and replied, “Buy you something?” Then he immediately changed his mind and said, “Buy skis!”
Granted, he is 5, so we’re going have to work up to long-term investing. For now, we’ll keep going to the bookstore.