Credit Canada

It's never too early to start schooling them on the building blocks of personal finance.

Ever heard this remark?

"Mama, don't let your babies grow up to be credit junkies."

Or how about: "Why do kids these days think money grows on trees."

Face it. We live in a buy now, pay later generation -- with savings rates in the negative and Canadian families now owing a record $1.1 trillion in total household debt. Some aren't coping, as our economy teeters on recession, jobs are lost and our real estate market slows, meaning we can no longer count on rising housing values to bail us out.

Let this be a warning. For the first time since the recession of the Nasty Nineties, Toronto home prices retreated in August. Values in the city are off by only 1% to an average of $377,990, but this could be the beginning of a price correction.

As families become more and more overwhelmed with debt, they're forced to throw in the towel. And a sure-fire sign that they're not coping is a 19% hike in personal bankruptcies in July.

We all know it. It's time to get off this debt treadmill.

But are we growing the next generation of over-spenders, when parents continue to max out credit cards, use one card to pay off the minimum payment on another, then head off to the mall and not have the guts to say "NO" to the kids when they nag us to buy the latest in toys, designer labels, cellphones and technological gadgets?

Worrying about how to teach her children about money, plus coping with the expense and stresses of raising a young family while running her own company, has led Eugenia Lista-Zaharchuk and her Jet Productions business partners to give birth to a brand new concept in Canada: The Parents Canada Babes & Tots On the Go show. This month, it was launched in Mississauga, and will come to Ajax in October, followed by London in November.

The format -- (go to babesandtots.com for details) -- includes four weeks of seminars and a two-day consumer show, and covers all aspects of parenting, like nurturing, nourishing, connecting and protecting. Teaching kids about money will be a big part.

In fact, I'll be taking part in the seminar called Family Finances: Your Budget After Baby, Tuesday Sept. 16, at the Mississauga Living Arts Centre. Start time is 7 p.m. I'll also be at the Ajax Convention Centre on Oct. 21 and London's Western Fairgrounds on Nov. 18.

"I'm definitely going to listen to what you have to say, because when I raise my children one of the things I'm nervous about is getting into this habit of giving and buying," said Eugenia, 42, who after a career as an events co-ordinator with Simpson's, launched her own company, EL Productions.

Five years ago, she married Jeffrey and gave birth to daughter Logan in 2004, followed by a son, Nathaniel, 11 months ago.

"My daughter is already saying things like can we go to Toys "R" Us. I don't want her to believe that money grows on trees," she said.

Eugenia also teaches event planning at Ryerson and says it worries her to see so many students struggling with debt.

Not only do students face skyrocketing tuition costs, but often it's difficult to keep up with credit card and cellphone payments. And if they can't pay, guess who is usually forced to come to the rescue. The parents.

Laurie Campbell, executive director of Credit Canada, says it is very important for parents to make a concerted effort to teach their children about money management. And the earlier the better.

"There are opportunities everywhere to instill strong financial skills with your children, including comparing prices at supermarkets, making decisions about their clothing and the cost associated with it, allowances and how they should be used along with planning family vacations and the money needed to be saved," said Campbell.

As for preventing young children from staging a temper tantrum in a store when a parent does say "NO" -- Campbell advises setting up a pattern of resisting to give in early on. "Children are always looking for patterns and routines -- especially when it comes to any form of treats or special privileges. To avoid arguments, plan ahead so that your child does not develop costly expectations and habits," she said.

An example is do not always buy a treat, like an ice cream cone, when on an outing.

EXPENSIVE

Also, don't forget raising children can be expensive.

According to the latest numbers supplied by Manitoba Agriculture, which calculates the cost of raising children, a daughter born in 2004 will cost $166,549 to raise to age 18. A boy costs slightly more at $166,972.

The numbers also show the first year is the most expensive, with parents spending $10,000 before the child turns one. The least expensive years are from age 1 to 12, when about $7,000 is spent. Then the cost rises as the children get older and head off for a post-secondary education. Expenses include food, clothing, health care, personal care, child care, furnishings, gifts, school needs and transportation.

Two-income families are often needed to cope, which may explain the rise in the number of mothers with children under age 3 entering the workforce, which jumped from 55.1% in 1993 to 63.4% by 2003.

Bottom line is the world is full of different personalities in dealing with money: The tightwad, the spendthrift, the conservative planner, the liberal planner and the gambler. When it comes to our kids, the fruit usually doesn't fall far from the tree. So, teach your children well.

IT DOESN'T GROW ON TREES ...

Here are 10 Top rules to teach your children about money:

- Examine your own attitudes towards money. Be careful to set a good example.
- Give your children an allowance and let them be in charge of spending it. Teach them how to budget and plan purchases in advance.
- When the child is old enough for allowance, assign a household chore that he or she can be responsible for doing regularly.
- Provide income opportunities by offering a small amount of extra money by doing an extra chore.
- Teach your child to save regularly. Set up a piggy bank or a bank account and talk about long-range goals. - Help your child discover sharing and helping others. Get involved in a favourite fundraising effort.
- Show your child how to be a wise consumer. Compare shop for the best price. Make kids savvy about commercials that entice them to spend.
- Teach your child about credit. Look at the return of savings versus the cost of credit. A kid will quickly go into the red if his or her savings is yielding 1.5%, but the credit card is costing 18.9%. Also, warn about identity fraud.
- Teach your child the value of wise investments. Tracking savings in a RESP (Registered Education Savings Plan) can be a great way to learn.
- Involve your children in family financial planning, by letting them see you pay bills, plan a budget and plan for a major expense or vacation. Let them help in the decision-making.

The Canadian Bankers Association also offers tips on kids and money and launched a "Your Money" seminar for students at yourmoney.cba.ca. The Financial Consumer Agency of Canada offers a financial life skills program at themoneybelt.gc.ca.

*Reproduced with permission - Sun Media Corp.