How to teach kids about money, even if they’d rather spend than save

For this week’s No More Ls column, we’re looking at how parents can help their kids become savers instead of spenders. 

My siblings and I grew up with a set of money lessons, courtesy of our accountant parents. Our allowances arrived twice a month on fixed dates, mirroring a paycheque. We signed contracts outlining our responsibilities, and sorted cash into clear jars labelled saving, spending, giving and vacations. But we didn’t emerge from childhood with the same approach to money.

One is a spender with a YOLO approach—think incredible meals and frequent travel. And my other sibling and I are more cautious (and better positioned for retirement). 

Now, with my own children nearing school age, I’m wondering which money lessons will actually stick. My siblings and I had the same foundation, but not the same habits. So, what works, especially if saving doesn’t come easily? I spoke to two financial experts about how to teach kids about money. 

What age to start teaching kids about money

Start early. Begin teaching about money around age five, or earlier if a child shows curiosity, says Robin Taub, an accountant, parent and author of The Wisest Investment. Her framework focuses on five pillars—earning, saving, spending, sharing and investing—introduced in age-appropriate ways, from early childhood through young adulthood. In a digital world, she suggests using cash with kids. Physical money makes trade-offs easier to understand, as kids can see they’re giving something up when they spend. 

Even young kids “earn” money, often from gifts, the tooth fairy or as an allowance. Parents can guide choices like spending, sharing or investing. “That teaches them at an early age that money is a finite resource, and that once you make a decision with it, usually you are committed,” Taub says. 

How much allowance should you give your child?

A common guideline is $1 per week per year of age. But opinions on allowances have evolved since my childhood in the 1990s, with Canadian parents divided on how much to give or whether to give one at all. Some families tie allowances to chores, while others feel helping out around the house is just part of being in a family. Some offer a base amount, with opportunities to earn more. “You have to do what feels right for your family and what’s aligned with your values and your resources,” Taub advises. 

What matters most is how the allowance is used, though. Taub describes it as a tool to teach kids how to manage money, noting that kids tend to think longer and harder about spending their own money than they do their parents’ cash.

Dividing money into categories—like the jars I used as a kid, or the viral “cash envelopes” method from social media—forces prioritization and creates natural consequences when it runs out. Younger kids usually need guidance on how much to allocate, while older kids might take more ownership. “You do want them to make some mistakes when the stakes are low and learn from those consequences,” Taub says. 

The teaching shouldn’t stop at allowances. “Look for opportunities in your day-to-day life to build in a money lesson,” Taub says. At the grocery store, for example, parents can talk through needs versus wants, compare prices or involve kids in paying and reviewing receipts. 

How to teach kids how to save

Jim Pan, an advice-only financial planner and founder of Panorama Financial Planning, is already putting money lessons into practice with his six-year-old daughter. Right now, the focus is foundational: understanding what money is, how it’s earned and what it means to spend it. Like Taub, he uses cash to make the concept tangible. Kids “need to physically understand that when they spend money, they are losing something,” he says. As his daughter gets older, he plans to introduce a three-bucket system (saving, spending and giving), along with teaching her about taxes and investing. He’s already shown her the registered education savings plan (RESP) he set up for her and explained that the money grows over time through compound growth. 

For kids who lean toward spending, Pan suggests anchoring saving to a specific goal. Identify with the child something they really want but can’t yet afford, then create a plan to work to pay for it. “They need to see money as a tool to help them to get what they want, but also they need to put some conscious effort into it,” he says. 

Pan volunteers by teaching financial literacy to high school students, many of whom have part-time jobs. One key lesson: “pay yourself first.” That means setting aside a portion of each paycheque for savings before anything else. Setting a clear goal and directing money into a separate account can help build discipline. (Need some help saving yourself? Here’s how to pay yourself first.)

Teaching credit before it matters

For teens 18 and older who can apply for a credit card, understanding credit is crucial. Parents can help older kids understand the mechanics of how credit cards work, Taub says, by showing them statements, explaining minimum payments (and why they should pay moreand detailing the difference between debit and credit—all before they’re old enough for their own card.

Credit cards can be useful in Canada when managed well; they’re convenient and help build credit history. But they also make it easier to overspend. That same goes for buy now, pay later options common at online checkouts. The key, Taub says, is helping kids understand that it’s all real money, even if it doesn’t leave their account right away.

Different kids, same goal

Even with the same lessons, kids will approach money differently, as I saw in my own family. Rather than try to change those tendencies, the goal is to give kids the tools to manage them. 

And if you didn’t start money lessons early, that’s OK. “It’s never too late to start,” Taub says. Focus on meeting kids where they are, keeping lessons relevant and encouraging them to ask questions. Because whether your kid is a saver or a spender, building awareness at any stage can help them make better money decisions for the long term.

Read more from this issue of The Get:

1. Mother Knows Best: The best financial advice from Canadian moms
2. Never bothered to calculate your net worth? It’s real easy math (promise)
3. MVP: Carlene Higgins on starting a beauty brand at 50
4. Understanding debt consolidation and how to choose the right credit option