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Introducing your children to personal finance

To the point In this article, find out how to introduce your children to personal finance and money management.

Parents of young children and teenagers play a key role in their financial education. Children won’t adopt sound financial habits unless they’re taught. And, in my opinion, teaching personal finance is just as important as reading, writing and math. Whether we like it or not, money plays an important role in our lives. Ideally, we should start talking about money as early as possible, and integrate financial education into our daily lives. And since children often seek to imitate adult behavior, parents must start by setting an example.

These are just a few of the tips that will be covered in this article. We’ll also explain how to introduce your children to personal finance in an age-appropriate way, with the help of educational games, children’s books, documentaries and various initiatives.

Adapting learning to your child's age

Learning financial management takes several years. The earlier you start, the more likely your children will adopt sound financial habits and become savvy consumers in adulthood. Of course, teaching about financial management needs to be adapted to your child’s age. On the one hand, young people learn quickly with games, but on the other, teenagers learn with practice and application.

In the following paragraphs, you’ll find out how to adapt personal finance teaching to your child’s age.

Financial education for children

First of all, remember that the goal is for your children to adopt sound financial habits as early in life as possible. It’s much easier to instill a good habit than to change it in adolescence or adulthood.

So, from the age of 3, you can play role-playing games (e.g. cash register) and educational games (e.g. Monopoly Junior). You’ll find examples of games in the next section, “Fun and educational games”.

You can incorporate money lessons into everyday family activities like grocery shopping, going to the bank or shopping for back-to-school clothes. As a general rule, children retain learning from personal experience more easily.

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From the age of 8, you can teach your child to take advantage of discounts and promotions. You can also involve them in family decisions that involve financial choices, such as buying a new car or taking a trip.

In addition, you can give your child a littlepocket money and let him or her make mistakes. It’s better to make a mistake on a few-dollar toy than on a several-thousand-dollar purchase when you’re an adult.

Finally, you can explain the difference between a need (eating) and a want (buying a new video game).

Financial education for teenagers

For teenagers, the goal is to help them become adults who can manage their personal finances and avoid debt .

So when your young children are teenagers, you can start talking to them about budgeting. Then you can take the opportunity to open a bank account.

You can also help your teen set savings goals (e.g., buying a new mountain bike). Don’t hesitate to explain the difference between needs and wants, and the resulting budgetary choices. But, also, the concept of indebtedness when talking about payment by debit or credit card. This is an important subject, as children are less and less exposed to cash.

If your teenager has started working part-time, take a few moments to sit down with them and help them understand their first pay stubs. You can use this opportunity to explain taxes and social contributions (redistribution of wealth).

Finally, if you’re saving in an Education Savings Plan(RESP), you can discuss the subject of post-secondary tuition fees with your teen.

Financial education for young adults

Your child is now a responsible young adult. But financial education is far from over. The aim is to explain more advanced financial concepts that will have a major impact on their adult lives.

If your child is a post-secondary student, you might suggest opening a student chequing account. For example, the BMO Student Performance Chequing Account, with no monthly fees while you’re in school.

Normally, with the financial education you’ve given your child, he or she shouldn’t have any consumer debt. But if they do, explain why it’s better to pay off debts as quickly as possible.

If your child is passionate about personal finance, he or she can read websites, blogs and join groups and communities on social networks. I’m thinking in particular of the private groups Milesopedia and EducFinance, L’argent ne dort jamais.

Finally, you can explain the concept of compound interest and tax-advantaged accounts such as FHSA, TFSA and RRSP.

Fun and educational games

Did you know that there is a wide range of games that are both fun and educational?

That said, you don’t necessarily need to buy a board game, especially for young children. In fact, you can simply role-play with your children. For example, you could run a grocery store or restaurant, if you have a children’s stove at home. Then, if you have a cash register, you can make purchases and carry out transactions.

Otherwise, among educational board games, the most popular are “Monopoly Junior” and “Pay Day“.

  • Monopoly Junior is a game for children aged 5 and over that helps them understand the power of money. Players learn how to handle money, make transactions, pay rent and much more.
  • Pay Day is a financial management game designed for children aged 8 and over. Players learn how to manage a budget and have fun earning and spending money.
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Books on financial education for children

Educational games are great. But did you know that there are also excellent books on financial education?

For instance, “What is Money?” by Kelly Lee (2021) is a personal finance book for children ages 3-6. It explains money, where it comes from and why saving is important, using short stories and colorful pages

Another exemple is “A Boy, a Budget, and a Dream” by Jasmine Paul (2020), a finance book aimed to teach financial literacy for kids of age 4 to 8. It teaches financial concepts such as saving and delayed gratification.

Financial education initiatives

CFEE's Talk with our Kids About Money

The Canadian Foundation for Economic Education (CFEE) has launched the “Talk with our Kids About Money” (TWOKAM) project, which includes financial education ressources for children of age 5-7, 8-10, 11-13, 14-16 and 16+ years old.

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What’s more, “Talk with Our Kids About Money Day” is a day when teachers and parents can discuss money with their children. The event website offers easy-to-use resources. Parents and guardians can consult the “Home Program” resources, while teachers can consult the “School Program” resources. This year, “Talk with Our Kids About Money Day” is May 15, 2024.

CPA Canada's Raising Money-Smart Kids

CPA Canada (Chartered Professional Accountants Canada) offers a parents-guide-to-raising-money-smart-kids.

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The guide includes resources to help you teach your kids about money: how to draw up a budget, how to set goals, and more.

Bottom Line

In short, money plays an important role in life, and parents play a key role in their children’s financial education. Parents need to start talking about money as early as possible, and incorporate lessons into everyday life. However, learning about financial management needs to be adapted to your child’s age. In this article, we’ve covered tips and tricks, but also shared educational games, books and documentary series.

To find out more, take a look at this guide to personal finance.

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Vincent Morin
My name is Vincent and I've been a stay-at-home parent to two young boys since achieving financial independence in 2021 (FIRE). Previously, I worked for 12 years in financial technology for a major US investment bank (G-SIB). I'm passionate about personal finance, stock market investing, reading, writing, cycling and gardening. I'm also the founder of Retraite 101, a personal finance blog followed by over 20,000 people on social networks and quoted in several media, blogs and finance books. Despite early retirement, I continue to write about personal finance to share my passion with Quebecers and motivate them to take charge of their finances.

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