Teaching children about money

Start teaching your children about money when they are young. This way, they will learn how to:

Canadian and international organizations are working to identify the types of financial knowledge, skills and behaviours children should learn at different ages.

“As more financial decisions are faced by Canadians at younger and younger ages, grasping financial principles early in life is crucial to being better prepared to participate in the Canadian and global economy and avoiding pitfalls in financial decision making.”

Report of Canada’s Task Force on Financial Literacy (December 2010 Report)

Here are some financial concepts you can discuss with your children as they grow up. For example, help your children learn to:

Ages 4 to 8:

  • understand that people have a limited amount of money to spend
  • use money to buy basic goods and services for simple transactions
  • divide allowances or other money received among the financial goals of saving, spending and sharing
  • understand that there are choices when it comes to money, and that money spent on one thing means that there is less money available for something else.

Ages 9 to 14:

  • recognize the difference between needs and wants
  • understand the importance of saving a portion (for example, 10 percent) of all money they receive and the value of an emergency fund
  • create a savings plan for short-term and long-term financial goals
  • identify regular financial commitments families have and know that families use household income to meet those commitments
  • create a simple budget for an activity or event.

Ages 15 to 18:

  • understand the pros and cons of different payment options such as cash, debit cards and credit cards
  • understand different kinds of basic investments (GICs, stocks, bonds and mutual funds)
  • understand the time-value of money (for example, past, present and future worth of money) and opportunity costs
  • understand the concept of “living within your means” and why it is important.

Getting started

Put your children on the path to financial success and smart decision-making by starting early. You can help them gradually take responsibility for their own financial well-being.

Here are a few tips to help you get started:

  • Talk about money when your children are around so that they become familiar with financial terms and concepts.
  • Start out easy. With young children, it’s best to start with very basic concepts, such as counting and learning to identify the value of different coins and bills.
  • Build on the basics. As your child grows older, introduce more advanced concepts such as needs versus wants, budgeting, and income and expenses. Learning about finances at a young age will help your child have a better understanding of more complicated financial products in the future, such as credit cards, loans and investments.
  • Look for teachable moments. Running errands and visiting stores are opportunities to teach your children about money and involve them in the buying process. For example, check for weekly in-store specials or go through flyers together to look for coupons for items on your shopping list. Check the cost of similar products made by different brands and discuss the differences.