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Practical Tips For Teaching Your Kids Money Management

Financial Coach Guirlene shares easy-to-implement advice on how to instill good money management habits in your kids.

The question…

Hi Consolidated Credit team,
I’m a stay at home mom that’s also home schooling my kids. They’re old enough now (9 and 11) to start learning more about how money works. What are some great, practical tips for how to teach them?

Melissa C., Moncton, NB

The answer…

Teaching our kids money management at an early age is a key component of avoiding financial problems later on down the road. The road to financial success only gets more complicated as we grow older. However, if we help youth develop the right financial habits early on they’ll have the skills to overcome any financial problems they face.

Money does not grow on trees

The saying “money does not grow on trees” is a piece of financial wisdom all youth should understand as early as possible. It’s a foundational building block of financial education. When it comes to money matters, ignorance is not bliss and what you don’t know or understand can hurt you. Youth need to understand that money does not just magically appear in mom or dad’s wallet. Instead, parents need to consistently show the relationship between work and money. The lesson that parents need to showcase to their kids is a “no work gives you no money” mindset.

For example, if your child already does chores, try incentivizing your child by providing extra chores in return for a bit of money. Then help them to decide what to do with the money earned. An important item to note is that parents should not try to tie money and chores that they normally do together. Ensure that you are giving a monetary award for extra work on top of what they normally do. This prevents youth from neglecting regular household chores once they get a part-time job in their later teen years.

Don’t overcomplicate things

When trying to decide what would work best for teaching your child, there are thousands of resources available. Parents are flooded with advice on how to manage their own money and how to teach their kids about money. It can be really overwhelming. Parents find themselves stranded on what they can or should teach first. However, just block all of that noise out and bring your focus back to the basics.

For instance, a great activity for showing money management is to have three physical piggy banks for the kids. Each piggy bank represents represents a different category; spending, saving, and giving. Every time your child gets allowance money, encourage them to split up their allowance between the three piggy banks. These piggy banks allow your child to get hands-on experience with managing money. They also create room for financial conversations to be had when your child becomes uncertain of where to put their money. Another alternative to using piggy banks is to use clear jars. Clear jars allow kids to physically see how much money is in each jar at any given time. This can be rewarding and open up opportunities for conversations.

A more passive but simple way to teach your child some money management basics is to let your child see how you use your money. In other words, let them see how you pay your bills and how much those bills usually are. If you pay your bills online, let your son/daughter watch as you pay. Or, use cash to pay for their groceries and show the receipt to your child. Also, consider letting your child in on family budget talks. Combine these activities and repeat them over and over again. Soon enough, your child will adopt this as a habit and have a much better understanding of responsible money management.

It’s also important to not simply give an allowance for just “fun stuff”. We want our children to understand that it’s okay to spend on the things they want occasionally. However, it’s significantly more important that they cover their expenses, and savings goals beforehand. Consider giving a little bit of extra allowance if your child is meeting their savings goals consistently. As a bonus, this serves as an extra lesson about compound interest!

Money growth and financial behaviours

Aside from teaching youth the importance of money and the basics of how it works. It’s equally important to know how to make money work for you. The more complicated items such as investing in the stock market can be difficult to teach. Some children pick it up faster than others but that is okay! However, before kids become adults, parents should consider opening a custodial investment account (AKA Trust). These types of accounts are a way for parents to control their child’s investments without the child being able to access them themselves. You could call it training wheels for early investors. This is a great way to demonstrate compounding interest, dividends, and other investing knowledge in a safe way. As an added bonus, parents can save up for their child’s post-secondary education much faster.

We can’t overlook the power of modelling. Kids pick up so much knowledge just by watching. That’s why it’s so important to try and consistently model good financial behaviours. Parents can do this by simply showing their kids how they themselves save and spend money. Being a good financial role model is a great way for a child to pick up on the importance of financial security and money management.

One facet of money that often gets overlooked is the value that the act of giving brings as a part of their child’s financial education. Teaching kids about giving to the less fortunate demonstrates that while money is important giving to those in need is too. The key is to explain mindful giving. Show them that it’s good to give as long as it doesn’t put them (or you) in a bad financial situation. Being in financial trouble themselves isn’t helpful to them or others.


Financial education at an early age plays a critical role in developing good habits of saving and spending responsibly. The Dollar Detectives has great workshops that help youth understand and navigate the financial world. These programs are great for supporting parents in their efforts to give their children a solid foundation in personal finances.

It’s also important to note that this learning process continues even as adults. Which is a good thing! Time spent learning better money management skills is never wasted. However, like anything in life, it’s so important that we start early and with small steps.

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