Your children’s relationship with money starts with their earliest relationship—you as their parent or guardian.

While managing finances is an essential part of adult life, it’s not commonly taught in formal education. What is learned is usually done informally, as your children pick up on how you talk about, think about and use your money. 

You have an opportunity to intentionally shape your child’s financial perspective for the better, and perhaps assess your own view of money along the way. 

Your involvement can have a profound impact. The Financial Consumer Agency of Canada (FCAC) conducted a worldwide survey to determine financial literacy among teenagers. The findings showed that teens who talk about finances with their parents, even just once a week, score 33 points higher in financial literacy compared to those who do not.

Teaching kids about money at every age

Just like teaching any new concept, it’s essential to talk to our children about money in ways they can best learn and understand. Here are some ideas to help you start the conversation and do some age appropriate learning activities with your children.

Early learning

Pre-schoolers can start to learn the value of a dollar. Try showing them coins and dollar bills, and get them to practice counting money. They can learn about earning money from doing small household chores or receiving cash as gifts, and how to save it for something they want to purchase in the future.

Start teaching budgeting basics by using three jars: one for saving, one for spending and one for donating. This activity will show them how to start managing money at an early age.

You can also do activities at home that will help them understand the concept of spending money. For example, you can create a pretend store with items that have price tags. Then, give your children some money to “spend” in the store. Or you could do a baking project, allowing your kids to purchase each ingredient so they understand that even simple things like flour and sugar cost money.

Banking terms to introduce include: spend, save, buy and sell.

Growing their understanding

At this age, kids can start to better understand the value of money and the difference between a need and a want.

You can help your child set a long-term savings goal. For example, they can contribute a portion of their allowance to save for a large purchase, like a new toy. Help them open a bank account, so they can deposit money into their savings to help them reach this goal. Periodically, help them check their bank balance, so they can know their progress and continue to feel motivated to save.

Banking terms to introduce include: bank, account and balance.

Gaining independence

At this age, pre-teens can begin to learn the basics of budgeting. Budgeting includes understanding how much money they have coming in and how to account for what they spend.

If they already have their own bank account, you can review their transactions through online or mobile banking or a monthly statement. Looking at these transactions allows them to see how much they’re depositing and spending—and on what. This is also a great time to get them their own debit card.

You can also show them your family’s household budget. Seeing the budget can help them understand basic living costs like utilities, mortgage payments, insurance and other bills. Help your child create their own budget for the things they currently purchase.

Banking terms to introduce include: budget, debit card and statement.

Young adult territory

Teens might already have a job at this age or be looking to get one. You can help them understand more about their earnings by reviewing their pay stubs. Here, they can see what part of their earnings goes to employment insurance, Canada Pension Plan (CPP) and to any potential income taxes.

You can also help them set up long-term savings goals that are more substantial, like purchasing a car or saving for post-secondary education. After setting the goal, help them create a savings plan so they know what they have to do to reach it.

With contactless payments and digital payment options on the rise, this is a good time to explore options around different types of payment cards for online purchases or mobile pay opportunities. If that’s new to you as well, you can always learn together.

Your kids are old enough now to hear about your experiences with credit, debt and savings. Having an honest conversation about the tough lessons you’ve learned will help them understand the importance of proper money management. Also, these stories show your teens that managing money isn’t perfect (and neither are you), giving them permission to make their financial journey their own. 

Banking terms to introduce include: credit card, debt, mobile pay and taxes.

Preparing for their future