How to Give Your Child a Financial Head Start

Children are one of life’s greatest gifts. Well, most of the time they are. You might not be feeling that way when Precious #1 is shout-singing a lullaby to her baby doll and Precious #2 is fused to your leg while you wash dishes.

You want to give your kids a financial head start in life and what better way than helping them learn how to earn, save and manage their money? They'll appreciate this much more than you just handing them over handfuls of cash whenever they need it.

Here are 4 ways to help your kids get from zero to a money hero in no time:

Build a Credit Score from the Beginning

A good credit score can take years to build, so why not help your baby out by taking out a credit card in their name? Gretchen from Retire By 40 says that she and her husband applied for a credit card when their baby six months old!

She explained that they use the credit card a couple times a month for gas or groceries and pay it off immediately. They don’t carry it around with them every day and their child won’t see it, it’s just a tool to help their daughter build a credit score for when she needs it.

The only word of warning I have is to be careful with it. You don’t want to rack up debt, miss payments and endanger your child’s credit score before they’re even old enough to use it.

Disclaimer: Gretchen is a U.S. based personal finance blogger. Please contact your financial institution to discuss if this is available in Canada.

Grow Rewards from the Ground Up

This is pretty similar to the above point, except with rewards cards. Loyalty programs have become big business and they are only going to grow as more people sign up for them. Make your little darling become an AIR MILES member while they are cute and cuddly and they’ll be ready to travel the world at eighteen.

A couple things to think about: you’ll want a rewards program that’s been around a while. Something that’s flexible and will help your child do something fun and interesting when they’re old enough. Travel rewards will probably be the best bet, who doesn’t want to globe trot after graduation?

This is just an example. Some rewards programs require members to be at least the age of majority in their province.

Save for their Education

Most parents think about college for their kids but not everyone plans for it. One of the best tools for saving is Canada’s Registered Education Savings Program (RESP). Set it up when your baby is shiny and new and watch it grow with your monthly contributions.

There are a couple of advantages to saving this way, the interest earned is tax free and the government kicks in 20 percent (to a maximum of $500 per beneficiary) of your yearly contributions. Just set the amount you want to pay each month and forget about it for eighteen years.

Get Your Own Finances In Order

There’s lots of information out there about how to teach your children about money but there’s nothing like a good example. Take the time to build your own financial habits and watch that trickle down to your kids. If you pair that with regular conversations about money (age appropriate, of course!) and some guidance, you’ll be setting them up for success!

What's the one lesson you teach your kids about money? Join the conversation on Facebook.