Explained the inflation of children LesAffaires.com

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Personal money. The country is heading for an era of inflation that has not been seen for more than 40 years. How to communicate with children about the subject? How can they be prepared for the size of the economic tsunami?

The task does not seem easy, acknowledges Julie Brisett, a budget adviser to the former Montreal Cooperative Association of Family Economy (ACEF). “Many adults do not understand what is happening now. Many have not experienced this condition, ”said the young 30-year-old professional, who is experiencing the first period of his hyperinflation.

According to Canadian statistics, about one-third of Quebec’s current adult population was not born in 1980, and about a third were under 15 at the time. In other words, two out of three adults enter an unknown area. The ACEF adviser noted, “Many of them have no idea how this incident will affect their personal financial and, increasingly, their daily use behavior.”

Bank of Canada interest rate hikes are already affecting mortgage rates, which are hovering around 5%. Financing a vehicle (purchase or lease) at 8%, 9%, 10% could be the new norm by the end of 2022, according to the Automotive Finance Industry report. Not to mention that petrol is established at a price of more than 2 2 per liter and the price of groceries is 10% higher than the same date last year.

Prioritize simplicity

In this context, how can we talk to our children about inflation, which already affects all sectors of the economy? Julie Bricett suggests that parents take the path of simplicity. “Kids need to understand that moms and dads now need more time, more effort to get products and services. They even have to deprive themselves or change the content of their purchases so they don’t go into debt. If it doesn’t already,” she explains.

This new reality, which is forced to review product pricing, also affects children, warns Scotabank’s financial planner Boan Ivanov. The latter advises the parent to help the child set new realistic goals. “If the child gets, for example, $ 2 for each household chore she performs, then the exercise determines how many tasks she now has to perform to carry the tempting object.” She is familiar with the child in terms of words, terms, products. After all, their universe is much more limited than that of adults.

Stephen Rochan, vice-president and general manager of BMO Nesbit Burns Portfolio Advisory Group, also suggested a methodology. “For example, rising petrol prices will have a far greater impact on a teenager who has obtained his driving license than on a child under 12 who is more concerned about collecting his Lego blocks.

Other recipes

Inflation can be tackled in a fun way, Julie Bresset added. To better understand the effects of inflation on wallets, children may, for example, ask their grandparents about the prices of certain consumer goods (chocolate bars, bubble gum, hamburgers, hockey card packs, etc.) when they were younger. . By writing them down on paper, they can compare to today’s prices. “It’s a start,” he said

Style images are also an option. “Ask the child to imagine watching television in the living room when their younger brother or sister walks into the next room with their drums and starts playing,” said David Dupuis, a former Bank of Canada analyst who now teaches management at Sherbrooke University School of Canada. “The beat of the drum will make so much noise that the child will lose the beats of his show. It is inflation, all the noise that prevents us from making good decisions. It is the noise that obscures the cards and prevents us from fully understanding what is happening in the economy today.

To alleviate the anxiety of children …

The issue of inflation, however, is not welcomed at all cottage tables. Katherine, a mother of two, aged three and seven, has no question of discussing rising costs with them. “They are very young. Why bother them with this adult subject? No need to worry about their age. My senior teacher is already talking in class about the Ukraine war … I don’t want to stress it out to my kids, ”said the 30-year-old mother in a burning voice.

There must be a time and an age to solve money-related issues, admits economist David Dupuis. But the economic hub for parents is not a good strategy to avoid talking about the costs that surround the lives of adults, he believes. “Children are best prepared as soon as possible and face the realities of life.”

At what age, precisely, is a child more adapted to the concept of money and, by the same token, able to adopt behaviors that will help him fight inflation? According to David Whitebread and Sue Bingham, two researchers at Cambridge University in the United Kingdom, the answer is seven years. In a survey published in 2013, two psychologists found that most seven-year-olds accept the value of money, are able to postpone decisions and realize that some choices are irreversible. “In fact, at this age children adopt good or bad habits towards money management that will follow them throughout their lives,” the two educators argued.

… And that of the parents

However, according to a recent survey of the country, these apprentices are far from a formality in the family. “About three out of four Canadian families still do not talk regularly with their children about money. In most cases, parents do not do this because they do not feel qualified enough to do so, “said Mark-Olivier Desmoris, an independent financial planner.

“The idea is not to blame the parents, but each of them should take note of their responsibilities,” he maintained. Early values ​​about money are developed in childhood and are passed on to parents. The sooner these standards are set, the better, he says. “Parents are the first sign of a child. Not school, not friends, not even aunts and uncles. If parents do not know where to start, it is in their best interest to seek help, ”the financier insisted.

According to him, the historic inflation that is hitting the economy hard is a great opportunity for parents to introduce their children to the basic values ​​of money. “It’s the right time to teach them how to spend better, make better investments and, above all, increase their capital as quickly as possible.” Overcome rising inflation. “And if parents don’t push, kids won’t.”

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