7 easy ways to teach your kids about money
As a parent, you have an important role to play in teaching your child the value of money and how to manage it. Building financial literacy from an early age will help them become more independent and equip them with solid life skills. Annie Savard, an associate professor in mathematics education at McGill University and a CIRANO fellow, has 7 tips on how to talk to your child about money.
1. It’s not that complicated
Money shouldn’t be taboo. Did you know you can start talking about money with your kids as early as age 4? No matter where the money comes from—whether you give it to them or they get it as a gift—you can use it as a teachable moment. As Savard says, “Kids live in the present moment, where they’re naturally focused on play without any responsibilities. You need to help them realize that having a roof over their heads, clothes to wear and food to eat isn’t free—all of those things are possible because you work for them.” And you have to make choices: you can decide to use that money to pay for a soccer ball, which means you don’t have it for other things. You have to give up something to get something else.
“Say grandma gives your daughter $100 for her birthday. She can keep some of that for small expenses and put the rest in her caisse account to save up for something special. Because the money is out of sight, hopefully it’s out of mind!“
2. Make it tangible
We’ve all heard expressions like “Money doesn’t grow on trees” or “Money doesn’t fall from the sky.” But they’re not all that helpful, especially in this digital era where most people use debit and credit cards, not cash. Money can be an abstract concept for today’s kids. As Savard says, “Around age 8 to 10, kids can understand the concept of financial obligations. They might want a new bike, so you have to explain that you have to pay rent or groceries first. We have to be clear with kids, so they understand which responsibilities are most important.”
3. Lead by example
Your kids learn from you by everything you say and do. As Savard says, “Even without realizing it, you’re teaching them spending habits. Talk to them about money, involve them in your decisions, make them a part of your savings goals, show them your budget. If you tell them you’re setting aside money for a trip, you might inspire them to save up for that bike they want.”
4. Teach them how to save
Whenever you give your child pocket money or they get cash as a gift, Savard says you can take advantage of the opportunity to teach them a few savings concepts. “Say grandma gives your daughter $100 for her birthday. She can keep some of that for small expenses and put the rest in her caisse account to save up for something special. Because the money is out of sight, hopefully it’s out of mind!”
5. Set the right goals
It can be hard for your child to grasp the concept of saving “for the future.” As Savard says, “If your 10-year-old deposits money at the caisse for a specific goal, like buying an X-Box, they may be more motivated to save. You might offer to pay half and then create a budget together. Not only will this help them save, but it will also boost their self-confidence.”
6. Delay gratification
In a world of instant gratification, it’s not easy to teach kids the value of waiting. “Children nowadays are used to getting an instant response to their texts or binge-watching their favourite TV shows without having to wait for the next episode. Putting money aside is about learning to delay gratification. Maybe your child sees a video game they want. You can suggest they wait 48 hours before getting it, to make sure it’s something they really want and not just an impulse buy,” says Savard.
7. Teach them to shop around
Comparison shopping, watching for sales, making a list—these are all great ways to teach our kids to make smart choices and become more discerning consumers. “Why not go through the supermarket flyers together? If chicken is on special, get them to find a chicken recipe. It might not seem like a big deal, but you’ll be surprised by what your child is learning. These small decisions can turn into bigger ones over time. You can help instill good financial habits they can carry with them the rest of their lives,” says Savard.
Now, over to you: What’s your favourite tip for helping your child manage their money well?
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