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Chloe Russman is learning about money at a young age. (Kerry K. Taylor for the Globe and Mail/Kerry K. Taylor for the Globe and Mail)
Chloe Russman is learning about money at a young age. (Kerry K. Taylor for the Globe and Mail/Kerry K. Taylor for the Globe and Mail)

Cash and Kerry

Save, spend, share, invest: How to talk with small kids about money Add to ...

“You have to pay for that!,” yelled my three-year-old while pointing at the groceries in my shopping cart. You’d think stepping out of the checkout line to grab a forgotten tub of ice cream would have thrilled my daughter.

But rather than scream for ice cream, the kid called for my arrest. The entire store, well, checkout aisles one through seven glared at me like a criminal while my toddler giggled with glee.

The public shaming was my fault. I’d been teaching Chloe about money, and for whatever reason the kid decided to grasp the concept of ‘paying for stuff’ right when it looked to her as if I was trying not to pay for stuff.

Since getting arrested for shoplifting while attempting to impart fiscal responsibility wasn’t on my parental bucket list, I asked Robin Taub for help. As the author of A Parent’s Guide to Raising Money-Smart Kids, a chartered professional accountant, a financial literacy consultant and a parent with two kids in university, I figured Ms. Taub had the skills to keep me out of jail.

“An ideal time to start talking to your kids about money is when they are in daycare or preschool,” says Ms. Taub. “At that age they are quite young, so you want to make it fun and engaging for them while using examples from their world.”

Playing counting games with loonies and toonies to build familiarity with currency, shopping at a farmers’ market and pointing out what apples and cupcakes cost, and getting money into their hands at any early age is key to raising cash-conscious kids, says Ms. Taub.

I’ve always been keen on giving Chloe a $3 weekly allowance – a dollar for every year she’s kept me awake at night. The idea is to put money into her tiny hands and teach her what it feels like to handle her own cash.

We started our financial literacy adventure by decorating four jam jars with stickers boasting the words Save, Spend, Share, and Invest. When she physically plunks coins into her Save jar she’s watching her money grow. When she removes coins from her Spend jar to buy something, she learns the pain of parting with cash.

Her decision to buy a fox stuffy over a plastic penguin taught her prioritization because she only had enough funds for one toy. When the newness of the plush fox wore off, the poor kid felt buyer’s remorse for not purchasing the bird. The Invest jar is for Chloe’s education, and the Share jar is for charity.

The jars are visual, the coins are tangible, and the learning process is relatable because she’s making her own financial choices. But should I just hand over the allowance, or should I make my toddler work for the cash?

“Some parents want their kids to understand what it takes to earn money so they tie chores to an allowance, while others feel that chores should be done as a family responsibility and the allowance is more of a teaching tool,” says Ms. Taub. “I think earning is very important especially as kids become teenagers. It’s the best lesson in terms of how hard it is to make money and how easy it is to spend because the jobs you can get at that age require a lot of hard work.”

There seems to be no shortage of financial literacy information for parents these days. Last year, the government appointed Jane Rooney as Canada’s first Financial Literacy Leader – the National Strategy for Financial Literacy is a result of her year-long consultations across the country. (And in case you didn’t know, November is Financial Literacy Month in Canada.)

Depending on the province, schools are either integrating financial coursework across grades or offering a mandatory financial planning course in high school. Yet a recent Bank of Montreal survey found that despite recognizing the importance of learning good financial habits in childhood, only 18 per cent of parents spend time talking about money with their kids.

I tapped into Ms. Taub’s knowledge on raising financially savvy kids one last time.

“Schools have a role to play but I think that a lot of the lessons do need to come from parents,” she says. “Look for teachable moments that can’t happen in the classroom, like paying the bills and being a good financial role model for your kids.”

While decorating jam jars and being scolded for an unpaid cart of groceries is neither part of the official school curriculum nor a mandate of The National Strategy for Financial Literacy, I’ll keep watching for those “teachable moments” that can only happen at home, like encouraging my daughter to keep saving for a plastic penguin. She’s only a loonie away from owning that darn bird.

Are you talking to your child about money? Giving them an allowance? At what age did you start? We’d love to hear from you - leave your comments below or tweet your thoughts to @globemoney.

Kerry K. Taylor is a personal finance and consumer expert, the author of 397 Ways To Save Money and the lone blogger at Squawkfox.com.

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