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OPINION: How early do you start to teach your children financial skills?

Children even as young as preschoolers can start learning about money.
Laurie Bissonette, FCPA, FCA, is a Partner with KPMG Enterpriseā„¢. She can be reached at 705-669-2521 or

Every business owner knows how important financial skills are to operating the business. And growing new entrepreneurs is good for the economy. So why then not try to help our children by teaching them financial skills as early as possible? A client of mine was recently commenting that he regularly encourages his children (in their teens) to ask questions about their money, their tax returns, and investments. So how do you teach your children about money and when is a good time to start?

Start now!

Children even as young as preschoolers can start learning about money. One fun way to engage your children is playing “store” where they have to earn their own money and pay for goods. For example, if a book costs $5 you or your child could count out five paper bills or coins to exchange when purchasing the book at your store. Or even count out change, as they get older. I love it when I get a checkout person who knows to give me a Loonie when I pass them $10.25 for an order that comes to $9.25. You know they are used to making change. The person who gives you back your quarter and three more never had that training!

Young school age children can help you cut out coupons or practise counting by adding the dollar value of items in the grocery cart as you explain the related costs. This may also work when the child wants to buy that extra item; you can explain the budget for the groceries and how much extra that item would be.

This is also a good time to open a bank account and take them to the bank to make a deposit with their birthday money.

You might have your child set a goal to purchase a special item – say, a toy.  Make sure the ability to save for the toy is within reach of a few weeks of achieving so they can understand the concepts you are trying to teach them. Let them pay with their own money and when they want the next toy, help them save to purchase it on their own.

Children between the ages of nine and 12 can be given limits about how much of their allowance or birthday gifts they can spend versus save. One example might be to have your child spend 50 per cent, and save 50 per cent (or you could expand the less and save 30 per cent and donate 20 per cent) of their money. They can also save for a special purchase and you can help them by identifying how many weeks of an allowance they need to save to make that special purchase. Try to avoid paying the top-up for a toy they really want but can’t afford. Also remember to show them that they have to save enough to pay the HST at the cash register.

Teenagers can comparison shop and start watching flyers or online coupons to find the item they desire at the best price. Helping them determine the difference between a want and a need can help solidify a solid background in spending money wisely. I know that if I wait to make a certain purchase, I find I don’t always need it so badly later – our kids will likely learn the same lesson.

At this stage you can also incorporate more of your family values in the mix such as charitable giving or helping others. Allow the child to decide which charity they want to donate to.

If they want to eat at the cafeteria one day a week they might need to pay for that luxury with their own money. You can also use this to help them incorporate healthy choices in to their diet. If they’ve spent all of their money beforehand then having them make a box lunch that day will reinforce making good choices on spending money and allow them the opportunity to make a better choice in the future.

Finally, you might like to sit down with your child at your financial institution and have them invest their own funds – with the risk assessment that the advisor determines is appropriate with them. I have heard some advisors say that youth who have been raised with this background often have more financial acumen than most adults.

There is no magic trick for helping children to understand money, but by including them in financial decisions they can relate to at each age will build them a solid foundation for when they grow up and run their own company.