Walking by East Lynn Park, a hub for many families in Toronto’s east end, it’s easy to forget that over the past few years kids haven’t really been able to be kids – having to stay 10 meters apart and avoid touching or even breathing on each another. Yet, other than the smattering of discarded masks on the grass, there are few visible signs of the effects of multiple COVID lockdowns and at-home learning.
While we are often told children are resilient, these same kids who are once again enjoying the freedom of playing together at a playground, have in fact lost a lot. Topping the list of such losses might be a three-way tie between lost time with loved ones, decreased mental health well-being, and slowed academic progress.
As pandemic restrictions continue to ease, parents and guardians have been playing catch-up on all three fronts – scheduling long overdue visits with family, signing up kids up for summer camps and other activities to make up for lost socializing opportunities, or seeking the help of a tutor to bring up marks as the school year wraps up. But while parents and guardians are trying to ensure their kids are back on solid footing, something else that was lost due to the pandemic – which is just as detrimental to our kids’ long-term well-being – may be being overlooked.
Missed Shopping Trips and Money Lessons
In 2019, before masks and social distancing, I made bringing my kids to the grocery store a priority. Buying necessities seemed to be an obvious life skill they needed to master.
Fast forward to 2020, and trips to the grocery felt like a scene out of a horror flick. Peaking around endcaps to make sure the aisle was empty before hurriedly venturing down, all the while looking over my shoulder to avoid other shoppers. Grocery shopping became a solo affair—no need to risk my children’s health and well-being. Eventually, I gave up in-person shopping altogether.
Once I got used to buying my groceries online, I reasoned grocery shopping was a dated life skill – as critical as churning my own butter. By the time our kids live on their own, grocery shopping will likely look more like an afternoon on Amazon than strolls along store aisles and a trunk full of reusable bags.
COVID’s financial literacy gap
One key thing I didn’t factor into my calculus was all the transferable life skills our children learn from in-person trips to the store.
“I have noticed a big gap in younger children’s financial literacy,” says Alexandra (Alyx) Valdal. Valdal, a certified financial planner with Iron & Pearl Financial and an instructor of financial literacy at Outschool online children’s education platform. “There are some little ones who are unable to tell me which cost more – a chocolate bar or a house?”
Valdal has been teaching online and offline for seven years. She has seen the financial literacy gap forming first-hand. Valdal notes that children six years and younger – who have the least experience shopping and running errands with parents and guardians – have been the most affected. That effect seems worse in regions with prolonged, severe, or frequent lockdowns. Older children with some pre-pandemic shopping experience seem to be faring better but still behind.
What is more likely to happen to people who aren’t financially literate?
Researchers have found that people who lack adequate financial literacy spend more on fees, pay higher interest rates, and accumulate more significant debt. Moreover, they have less saved and are the least prepared to manage financial emergencies and prepare for retirement. An addition, a recent report by Equifax notes that default rates among young adults are on the rise.
Comparison shopping, budgeting, and delayed gratification are just a few of the financial literacy skills our children would have the opportunity to acquire while in-person shopping with us. Moreover, the frequency of shopping trips allowed them to absorb, experience, and practise the skills they observed week after week.
How can we help our children?
With skyrocketing gas, food and rent prices it more important than ever that we help our children build these financial literacy skills as life becomes more and more expensive and we’re all feeling the financial pinch. Here are some tips by age group to support your child’s financial literacy development:
Kids 5 and under
- Take advantage of your kid’s curiosity and use natural day-to-day moments that arise to talk about earning, spending, saving, etc.
- Explain why you work and what you do with the money you earn.
- Answer your child’s money-related questions honestly and with intentional language – for example avoid saying “We can’t afford that,” if what you mean is, “That is not in our budget right now.”
- Role-play grocery shopping or going to a restaurant with your kids to give them a sense of what it is like to make purchases or earn money by working.
- Take your child on errands when you can – narrate your financial transactions so they learn and understand what you are doing when you tap that ‘magical’ card.
- Use allowances as a tool to let children practise transacting, saving, donating, and repaying.
- Nurture their entrepreneurial spirit by encouraging “kidpreneur” opportunities where children can sell products at yard sales, craft or farmers’ markets. Or sell services like leaf racking or pet sitting for neighbours on summer vacation. This will give children early exposure to working, earning and budgeting.
- Use summer activities, outings and traditions as an opportunity share your family’s money stories – both the good and the bad – to give real-world examples of your family’s values and money habits.
Kids 15 and up
- Give children opportunities to manage one or more budgets like clothing, lunch, or back to school – hand over as much control over the budget as possible. Doing so will give your children a chance to get the most out of a dollar. And don’t bail them out if they spend all of their budget on the newest Air Jordans or designer shirts. Let them feel what it is like when they overextend themselves financially.
- Look for teachable moments to explain how to build wealth by not spending all their income.
- Open a bank account – and even get them a credit card – teaching them how to manage credit and debt.
- Lead by example and show your child how having savings to draw on in times of emergency, investing early, and knowing how to manage debt, are critical skills they will need to master as young adults reach financial independence.
There are lots of opportunities on the home front for parents and guardians to explore to supplement their child’s financial literacy education. Whatever you are able to do in the coming months, try to take advantage of this time to work on closing the financial literacy gap. Your child will thank you, one day.