First Steps to Financial Freedom: A Guide to Teaching Money Management to Kids

02 February, 2024 • Par Natacha Langlois

In a world where financial education isn’t always a part of school curriculums, it’s up to parents to lay the foundation for their children’s eventual financial freedom . But where do you start? How do you turn abstract concepts like saving, investing, and budgeting into accessible, engaging lessons for little ones and teens alike? This step-by-step guide is designed to help, providing practical strategies and fun activities to teach the fundamentals of money management from an early age. Whether your kids are just learning to count or are preparing for college, it’s never too early or too late to start their financial education—a gift that will last a lifetime!

From 0 to 6 years: the first steps

At this age, children learn more through play, and the world of finance is no exception! Here are some suggestions for activities or habits to put in place from a young age:

  • To learn how to manage money, your children obviously need some! So, when you feel it's the right time, allocate your children a weekly allowance (between $5 and $10, for example), to encourage them to save and spend wisely according to their budget. At the same time, provide them with a piggy bank so that they can keep their money safe, thus reinforcing their sense of saving.
  • Take time to play board games with your children that focus on financial concepts, such as Monopoly, Payday or Destinies. Also offer them role-playing games where they will run a grocery store or restaurant , where they will have to manage the money given and received.
  • Introduce your children to the concept of budgeting when shopping by sticking strictly to the planned shopping list. For example, resist the temptation of sweets placed near the checkout counters and do not buy them, even if they attract the children's attention. This practice will certainly help your children intuitively understand the difference between wanting something and actually needing it .
  • A great way to get your kids started with money is to have them sort coins . Guide them through this task and explain how many coins of each denomination it takes to make a dollar.

From 8 to 12 years old: learning to save

As children grow, their questions necessarily become more numerous, and often more complex. So it's a good time to teach them the two basic concepts of financial management: spending and, of course, saving . Here are some suggestions for doing just that:

  • Involve them in family decisions and encourage them to give their opinion on upcoming major projects that require making important decisions about managing the family budget.
  • Take the time to share money-saving tips with your child . For example, you can teach them how to take advantage of promotional offers in stores or online.
  • Explain to him how to combine the pleasure of spending while saving : it is therefore entirely possible to enjoy a trip to the cinema while avoiding additional purchases such as sweets, drinks or popcorn, for example.
  • Encourage his entrepreneurial spirit : help him design his lemonade stand , his babysitting ad or even organize a garage sale.
  • Let your child make mistakes and errors. So let him spend his money as he wishes, even if you know full well that his purchase is not the best option.

From 13 to 17 years old: big kids, big responsibilities

Your child is now grown up, and it is better to give him more pocket money, but also to make him responsible for certain expenses . Here are some ideas of actions to take that will allow you to achieve this:

  • If you haven't already done so, now is definitely the time to create an account for your child with a financial institution and help them track their transactions, including deposits and withdrawals.
  • No matter what he wants, encourage your child to set a savings goal that will allow him to afford it himself when that goal is reached.
  • Obviously, as many are getting their first job, it is important at this age to show children how to manage their finances .
  • While it is possible to obtain a credit card in Quebec from the age of 16 with a co-signing parent, make sure to take the time to warn your child about the dangers of using credit . In a world where cash is used less and less, it is crucial for young people to quickly understand the responsible use of a credit card in order to avoid debt .

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