Empowering our kids today and tomorrow: The ABCs of money management

Children are keen observers. They learn how to manage money from their parents and they learn very young. Your attitude about money, and the actions you take to manage it, will have a lasting impact.

Money doesn't grow on trees
Spending is easy. The trick is to teach children how to earn the money necessary to pay for what they need today and tomorrow, to save for what they want and to help others when they can along the way.

A penny saved is a penny earned
Promote positive earning, saving and spending behaviors to help minimize "bad habits" later in life. The following steps will reinforce your children's positive attitude about learning and work, empowering them to manage their finances wisely through the years.

  1. Always start early
    Promote patience (delayed gratification), as well as counting and basic math skills with toddlers and young children. Help them understand the difference between things they need and things they want

  2. All things cost money – and you earn money by working
    During grade school, talk with your children about your job and what you do to earn your paycheck. Discuss what they can do to earn their own money (an allowance for doing household chores; yard work, shoveling or babysitting for neighbors; an after-school or weekend part-time job)

  3. Budget
    Discuss your financial goals with your children and explain how you budget and save what you earn to achieve those goals. Let them learn from your successes and missteps; encourage them to ask questions. If your children want something, rather than buy it for them, help them develop a plan for saving up to buy it themselves

  4. Bank accounts can help your savings grow
    Take them to the bank to open their first savings account. Have them make deposits regularly, setting aside some of the money they received as birthday/holiday gifts or as payment for work they've done. Explain that the bank will help their savings grow by depositing interest every month; the more money they save, the faster it will grow

  5. Create a savings strategy
    Constantly reinforce the difference between "wants" and "needs," and discuss the importance of helping others through charitable donations. Encourage your children to divide their money into three groupings: saving, spending and donating

  6. Cost of borrowing money
    Credit card, auto and home loan ads may lead your teens to believe borrowing money is an easy way to get what they want. Discuss responsible borrowing and the true cost of purchasing with credit. Use an example from your own borrowing history to show them how much an item cost, how much you actually paid for it, and whether or not it was worth the extra expense

Getting there is half the fun
Teaching children about money, and how to manage it, may seem like a daunting task, but it can include lighthearted good times. Sneak in spending and saving lessons through storybooks, playing traditional board games and games online, or by watching kid-friendly videos that include counting money, choosing how to spend it, and the cost of goods or services.

For great lessons about money and savings for your kids, add these books to their reading list:

  1. What Can I Buy by Julie Moriarty

  2. A Quarter from the Tooth Fairy by Caren Holtzman

  3. Pigs Will Be Pigs by Amy Axelrod

  4. Max's Money by Teddy Slater

  5. How Much Is That Guinea Pig in the Window? by Joanne Rocklin

  6. The Case of the Shrunken Allowance by Joanne Rocklin

More fun ways to save

Learning to save can be fun – for you and your children! Check out the tips below for creative ways to teach your children how to save.

  1. Entertain them
    Try storybooks, games and videos with monetary and savings themes. Check our summer reading list for ideas

  2. Play the virtual stock market
    Help your children to understand the workings of the stock market through TD Bank's Virtual Stock Market page

  3. Give your kids a job around the house
    Teach them that hard work pays off by compensating them for their time

  4. Make a savings goal chart or wish list
    Keep goals top-of-mind and help prevent frivolous spending

  1. Take them to the bank
    Help your kids open a savings account, make deposits and watch their money grow

  2. Let them pay
    Once they’ve earned money toward their goals, let them pay for items on their wish list

  3. Hunt for bargains
    Share the fun of bargain hunting at yard sales, thrift stores and clearance and sales sections

  4. Reward good savings habits
    Incentivize good habits by offering a savings match, a prize or a predetermined reward

This article is based on information available in January 2018. It is for general informational purposes only. It is not intended to provide specific financial, investment, tax, legal, accounting, or other advice and should not be acted or relied upon without the advice of a professional advisor. A professional advisor will recommend action based on your personal circumstances and the most recent information available.