A valuable skill which you can impart to your children is fiscal responsibility. By teaching them how to save, spend and manage debt, you help set them on track to a solid financial future.
As soon as your children are old enough to receive an allowance or take on a summer job, they're old enough to understand the value of saving. Suggest that they put part of each allowance into a high-interest/low-fee account, such as the CIBC SmartStart® program.
Older children who are earning their own money may be ready to learn about managing their income, including taxes. Help them to file a tax return every year, to generate RSP contribution room that they can use when they're older to save on a tax-deferred basis.
Young people are the target of much advertising and peer pressure. Smart shopping skills can help them make the most of their cash. Carrying less cash, setting a limit for impulse purchases and waiting a day or two for large purchases are good ways to ensure that they buy only the things they really need.
Many young people are receptive to the idea of borrowing magazines or music from the library or buying used DVDs at second-hand stores. Both tactics have the added benefit of being good for the environment.
Older children may qualify for a credit card or bank loan. This is the ideal time to teach them the right way to borrow.
To uninformed users, a credit card can be simply a licence to spend. In particular, post-secondary students who are away from home for the first time may be overwhelmed by the many expenses - both necessary and discretionary - that they need to manage.
Explain to your child that interest is charged right away on cash advances and on any balance that isn't paid in full by the payment due date. Encourage your children to pay the balance in full on the payment due date. You can remind them that using their card wisely and paying by the due date helps to establish a good credit history - which will help them borrow for larger purchases, such as a car or even their own home.
Your Financial Advisor can give you more ideas on how to give your child a sound foundation in money management skills. You will also find helpful tips and information at http://www.cibc.com/ca/student-life/kidsandstudents.html.
CIBC Imperial Service is available in select markets and is most appropriate for individuals with household investable assets of $100,000. CIBC Imperial Service is part of Canadian Imperial Bank of Commerce ("CIBC").
CIBC Imperial Service Advisory is published by CIBC Imperial Service with information that is believed to be accurate at the time of publishing. CIBC and its subsidiaries and affiliates are not liable for any errors or omissions. This newsletter is intended to provide general information and should not be construed as specific legal, lending, insurance or tax advice. Individual circumstances and current events are critical to sound planning; anyone wishing to act on the articles in this newsletter should consult with his or her Financial Advisor.
Banking products and services are provided by CIBC. CIBC Imperial Investor Service is a division of CIBC Investor Services Inc. ("CIBC ISI"), a subsidiary of CIBC, and Member CIPF. CIBC ISI provides investment and brokerage products and services.
1 Transactions must first be posted to your account before they can trigger a spend alert. It may then take up to 24 hours after a triggering transaction is posted for an alert to be sent.
2 This service is provided by Equifax Canada, a leading credit bureau in Canada.
† Canadian Social Trends, Summer 2005, Statistics Canada.
© 2007 Canadian Imperial Bank of Commerce. "CIBC For what matters." is a TM of CIBC.
TM Trademark of CIBC. ®Registered trademark of CIBC.
* Visa Int./lic. user.
