You can help your kids learn the value of a dollar by teaching them how to earn, give, save and spend—no matter their age.

Laurie Campbell, the Executive Director of Credit Canada provided the following tips on helping your kids by age:

Kids ages 3-7:

  • Before they can earn money, young children need to understand what money is. Very young children will think ten pennies is worth more than a quarter because there are more of them. To show them the difference, sort the coins into rolls so they can learn that a roll of pennies is worth 50 cents while a roll of dimes is worth $5. Then take your kids to the bank to deposit the rolls.
  • 'Needs' are things we require for basic survival and 'wants' are things we desire. For instance, food is a ‘need,’ a latte from Starbucks is a ‘want.’

    Teach your young children the difference between wants and needs by creating a ‘want’ column and a ‘need’ column on a sheet of paper. Have your child write down what they think are their wants and what they think are their needs. Make a list of your own wants and needs too. When they put a ‘want’ in the ‘need’ column, like a new toy, ask them to explain why they put it there. Then explain why it belongs in the ‘want’ column. Show them your own list of things you want but can’t have too so they understand that even mommy and daddy can’t have everything they want.

  • Introduce the idea of a budget by using a candy, such as M&Ms, as money. Show them that a certain number of M&Ms are used for household needs like food, shelter, clothing and savings. The remaining M&Ms can be used for wants.
  • Take your child to the bank to open a savings account. Make an appointment with the bank officer ahead of time and tell the bank officer that you want them to explain a savings account and how it works to your child. With the bank’s help, it can be a memorable experience for your child.
  • Give your child a weekly allowance for doing a set number of chores around the house. Some parents prefer to give a dollar per year of age per week. Others prefer to pay a rate. A good rate of pay is 10 cents per minute of work. It would take 4 hours of work to earn $20. This shows them that the harder they work, the more they earn. Take them to the bank to deposit the money in their new account.
  • Make sure your child learns about giving by setting aside 10% of their allowance to give to a charity of their choice.

Kids ages 8-12:

  • Kids at this age can learn more about the value of saving. Explain saving by showing that their weekly allowance can be used to buy some candy or maybe a pair of socks, but if they saved it for four weeks they would have money to buy something they really want. Kids need motivation to save so if they have their eye on something like a new video game, help them calculate how long it will take to save for the game.
  • Have your child save 25% of what they earn, or are given as birthday and Christmas presents, and put it in the bank. They will learn to appreciate the interest that accumulates and want to save more.
  • When they are used to having a savings account, explain the advantages and disadvantages of a chequing account. With a chequing account they will learn about deposits, withdrawals, and budget balancing but they will also learn about overdraft fees. Teach your child how to write a cheque and the reasons we use cheques.

What NOT to do at any age:

  • Do not say yes to your child’s every desire. If you do they will grow up with a false sense of entitlement.
  • Once your child knows the value of money and saving for what they want, do not lend cash when they are running short unless it is for a legitimate reason. If you support their over-spending, they will just think they can go to mom and dad when they blow their money on unnecessary things. They need to learn from their mistakes. It’s better to learn now then later on when overspending can lead to bad credit.