When we think of gifts for children we often consider toys and games or clothing. There is another type of gift that could help a child with his or her future, and it doesn’t have to be a “boring” gift. A financial gift may be something that not only gets the child excited about saving and it can help set him or her up for the future.
There are different types of financial gifts you can give, such as an RESP to save for the child’s education, or it could be a first bank account. Children love to feel grown up and a bank account that can be contributed to is a way to teach responsible money management too. As children get older, parents can expand the money management conversation with their children to cover more complex issues, such as budgeting and setting spending priorities, building up to things like investing early, the value of a dollar and the power of compound interest.
These are practical money lessons that are missing from our education system, so parents need to make sure their children understand how they can make their money work for them. The younger these lessons are taught, the better the chance that the child will grow into a financially responsible adult.
According to a National TD Bank Survey:
- 50% of Canadian (grand)parents say they have either purchased a financial/investment product for their children (31%) or say they have not, but plan to (19%).
- 16% of Canadian (grand)parents who have purchased or plan to purchase financial/investment products for their (grand)children say it was given as a holiday gift at the end of the year.
- 38% of Canadian (grand)parents who have purchased or plan to purchase financial/investment products for their (grand)children say it was, or will be, an RESP, followed by cash (27%), then savings bond (16%), mutual fund (14%), TFSA (14%) and GIC (9%).
- Generation Y are more likely to give their (grand)children cash (39%), while Boomers are more likely to give savings bonds (19%).
- 63% of Canadian (grand)parents who have purchased, or plan to purchase, financial/investment products for their (grand)children say it is to contribute to their education savings, followed by “to give a gift that (grand)children can use when they are older for something they want, like travel” (23%), then “to contribute to savings for home buying” (20%) and “to start the conversation about financial literacy” (15%).
- 38% of Canadian (grand)parents say under 10 years of age is the appropriate age to start talking about finances with their (grand)children, while 34% say it is 10-14 years of age and 17% say 15-17 years of age is the appropriate age.
Wherever you fall in the survey results it seems clear that we all agree children need to be learning about finances and how they work. A financial gift for the holidays could be the way to get that conversation started!