Talk about Money with Your Little Kids

As a parent, you need to talk to your kids about money — and the sooner that you do it, the better. You
can’t expect them to instinctively know how to handle personal finances the moment that they graduate
high school. You have to teach them these important lessons to equip them for the “real world.” 

Kids Between 2 to 6: 

It’s a little too early to teach them what interest rates are or how to make a monthly budget, but it’s the
right time to introduce the concept of money to them. 

Whenever you bring them to the grocery store or market, explain that you have to exchange the items in
your basket for payment. Have them hand the money to the cashier and take the change. If grocery
shopping with your kids is a major hassle, you can teach the same lessons about financial literacy by
playing store at home. Start as the cashier, then let them take on the role and see if they can calculate
change for any of your purchases.

Kids Between 7 to 12:

Introduce more complicated ideas about money, like earning and saving. Give them a small weekly
allowance that they can stash in a piggy bank. Whenever they want to buy candy or get a toy that you
don’t want to foot the bill for, let them know that they can use their own money to get it. 

The move will teach them several lessons:

• Saving for financial goals
• Buying things that you need versus what you want
• Delaying your gratification

Handing them money to save and spend also gives them the opportunity to make mistakes. It’s better
that they learn the pang of wasting a week’s allowance as a kid than wasting a paycheque as an adult.

Tweens and Teens: 

Now, you can talk to your kids more seriously about money to prep them for their adult years. Here are
some things that you can cover at this age:

• Saving for higher education
• Making a budget
• Using a credit card
• Collecting paycheques
• Interest

This is also a good time to discuss your income, savings and even your debts. Maybe you need to
get out of debt with a consumer proposal or maybe you maxed out one of your credit cards to settle an
emergency expense. Being honest about your money problems will give them a clearer perspective of
the household’s finances. It will make it easier to explain why you can’t splurge on new clothes or take a
big family vacation this year. 

The sad truth is that parents often pass down bad money habits to their kids — whether it’s acting too
loose or too strict with spending. Children notice how you deal with your finances, and they will copy you
if you’re not careful. The best thing that you can do is give them the tools to be responsible with money
early on and hope that they leave the bad habits behind.

Kids are sponges. They absorb everything that you put in front of them, whether you like it or not. So,
take advantage of this time. Talk to them about money as much as you can so that they go from having
a full piggy bank to a full savings account when they grow up.