Asking someone about their finances is about as uncomfortable as asking them about their weight.
People tend to be tight-lipped about the numbers in their bank accounts, especially in front of their kids. But some financial experts say kids stand to benefit if parents are a bit more open.
"Everybody makes financial mistakes, and trying to keep that from your kids — it may be an opportunity for them to learn something," said Perry Ceholski, vice president of wealth management at Blue Shore Financial.
Research suggests that Canadian youth are among the most educated in the world when it comes to financial literacy — a catch-all phrase to describe everything from understanding how pay stubs and taxes work, to more complicated concepts such as comparing relative prices of items, and the impact of interest rates on debt and investments.
But 13 per cent of teens still lag behind, according to a report on students' literacy by the Organization for Economic Co-operation and Development.
In a world where Canadians owe on average $1.70 for every dollar they have in disposable income, Ceholski says parents ought to be more upfront with their children when it comes to making financial decisions.
It can prevent them from making big mistakes in the future.
Open and honest
"The real challenge with financial literacy is that people are afraid to speak to their kids about finances," Ceholski told host Angela Sterrit on CBC's B.C. Almanac. "Money is very personal."
"If you have become over-leveraged — or you have made a very good stock selection — share that news with your kids. Explain to them how you got into that position, your plan to get out, and what they can learn going forward."
Ceholski says kids are quite receptive to basic financial skills early on in life. Kids generally begin receiving cash in the form of birthday and holiday gifts around the age of seven — a prime time to open up their first bank account.
"Clients that have had early experiences with money and positive experiences with money tend to be a better client in the future," said Ceholski. "They are certainly more responsible and more sophisticated in terms of [financial literacy]."
Since children generally don't have many bills to pay, Ceholski encourages parents to let their kids invest some of those dollars in stocks.
"That teaches them a lot about how the time value of money works in terms of having money in something that earns interest, and how the stock market works," he said.
Parents can also teach kids basic financial skills by taking them on regular trips to the grocery store and teaching them how to shop on a budget.
And including kids in a bigger purchase, like an automobile, can prepare them to navigate similar waters when they're older.
"Financial literacy is a lifelong journey," he said. "You can't expect the school system or a website to train your kids to be properly prepared in the future out in the real world.