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With kids and money, it comes down to building good habits

Jennifer Miller doesn't want her children to fall into the trap of so many Canadians who live beyond their means and struggle with mountains of debt.

So the Montreal mother of two and her husband began instilling strong financial habits in their son Jack when he was eight years old.

They started by talking to him about money and gave him a multi-slotted piggy bank that reinforced their teachings about financial values.

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"You're trying to build habits," said Miller. "The way the economy is now, people spend so much money on houses they can't afford and materialistic things that they can't afford. I think it's very important to swing sort of that pendulum back."

The Moonjar Moneybox is just one of the tools that can help teach kids about the value of money. The box contains three slots, divided into categories of spending, savings and donations.

Every dollar Jack collects in allowance or birthday money is divided among the categories. He is free to use the spend section on anything he wants, the save section will be used to contribute to tuition, while money set aside for charity was recently given to the Terry Fox Foundation.

He also has a bank account that allows him to track his accumulated savings.

"I think it has empowered him a little bit more to take responsibility," Miller said. "He doesn't seem to — as he's getting older — ask me for the toys anymore. If that's what he wants, then he'll go and spend his own money."

Robin Taub, a chartered accountant and author of A Parent's Guide to Raising Money-Smart Kids, said it's important for parents to teach their kids about such a critical life skill. She advises that small steps be taken once a child shows interest in money or starts asking for things — usually at about the age of four or five.

Taub suggests parents giving kids a tour of their house to explain how much things cost, and letting them hand the cashier cash for groceries. Children should also be encouraged to help cut out coupons and be explained how a bank machine works.

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"Look for those teachable moments, those opportunities that crop up in your day-to-day lives to build in a money lesson," she said.

Most importantly, Taub suggests that parents make the subject fun.

Parents can turn to board games such as The Game of Life and Monopoly, books like the Berenstain Bears Get the Gimmies, and websites including (, which have interactive games about money. Many banks also offer special programs to attract young customers.

Taub said the most important way for parents to teach children about money is to be a good role model.

"They're watching and they're learning from you so it's important to get your own financial house in order so you can lead by example," she said.

Allowance is also a very useful tool that allows kids to manage their money, make choices, and experience the occasional mistake, she said. The suggested amount of allowance varies by family means and parental choice.

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Typically, for young children, parents should budget between 50 cents to $1 per year of age — or $4 to $8 for an eight year old.

Miller gives her son $10, but frequently withdraws some of it if he hasn't completed chores such as taking out the garbage or emptying the dishwasher.

Judi Meade has seen the struggles parents face in helping their children differentiate between need and want every time they enter her toy store.

"Kids are used to getting more than they need but they receive without any understanding of the value," said the owner of Art-Enfant, a small boutique store in the upscale Montreal neighbourhood.

Gary Rabbior of the Canadian Foundation for Economic Education says it's important to provide young people with financial fundamentals to build their confidence as they begin to take more charge of their finances.

"It's not rocket science," he said. "It's important to teach young people that every decision you make has a tradeoff."

A survey released by the foundation earlier this year found that 96 per cent of Canadians believed that teaching financial literacy to children contributed to financial stability later in life. However, only 18 per cent of parents actually admitted to having discussions about financial matters with their children.

The non-profit is working with schools to help teachers in several provinces incorporate the subject in their curriculum. Last year, it launched Talk With Our Kids About Money Day.

Rabbior said it's important to teach children about money so they can avoid making costly mistakes later in life.

"They're getting access to more debt from credit cards and whatever. If you don't do it effectively it can leave a financial blemish on your record that can haunt you for a long time," he said.

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