They say the best way to educate a child about the ways of life are simply to lead by example. The same goes for developing good spending and saving habits – and the basics of money. Starting young is best, but delving into the fine art of finances is an important lesson as any age. Here are a few points to cover when teaching your kids the value of money.

The value of money is a fundamental concept that every child needs to learn and understand. Kids need to grasp the truth that money is earned and isn’t always available to spend willy-nilly. Twenty dollar bills don’t just flow freely from an ATM without the bank balance to deliver the funds. And, much to a kid’s dismay, money does not grow on trees in the back yard.

Explain, Discuss, and Answer All Their Questions

Don’t just preach to your kids about spending and saving and such. Make learning about money a fun and interactive adventure! When you’re out shopping, make a point to discuss how much their favourite cereal costs and how to shop smarter and pay attention to prices. Get your child involved in the shopping trip by having a friendly competition of who can find a better valued item.

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Tell your kids about the costs of simple things in your family’s life. That you go to work every day to pay for your house, in order to buy the food in the fridge, and to pay for the shoes that are on their feet. Often times, giving kids their own money to spend and to save, is the most practical way to teach them about money.

• Allow them to choose what they want to buy – but shop first. Explaining the reality of how much a video game or Barbie doll costs will be a true eye-opener.
• Let kids have their own money. Whether it’s a weekly allowance or a monetary gift from grandma and grandpa.
• Set a dollar amount they are allowed to spend and put the rest away for safe keeping.

Make Them Work for It

A child has no problem asking for the latest pair of trendy sneakers from mom and dad. But forking out the cash to pay for their frivolous want is another story entirely – for the most part. Kids see their parents spend money here and there and think they’ll get what they want simply by asking nicely. Learning to say no, as parents, can be a valuable lesson to a child about working for what they want and saving their pennies in order to get it.

Going back to the trendy sneakers for a moment here, sit down with your child and discuss what they want to buy and why. More than likely they saw a pair of the cool new kicks on the feet of some friends from school and just have to have a pair of their own. Head to the store – or better yet look online – at exactly what they’re drooling over.

Look into the price, availability, and practicality of the purchase they want to make. Now, set forth a plan to make their dream of buying these coveted pair of shoes a reality. But in a smart and educating manner. Write down the purchase price **including applicable taxes** of the item your child wishes to buy. Secondly, work together to come up with ways to make money – daily chores, helping out in the community, cleaning up after themselves.

Before they know it, they’ve worked and earned their way to buying something they wanted and saved up for themselves. Now, that’s teaching your kids the value of money!

When in Doubt, Try an App

This generation of kids is all about the tech and online everything. Why should learning about finances be any different?! An easy way to take the art of financial literacy to the next step is with the help of an educational and interactive app. There are a whole slew of apps on the Canadian market to assist in teaching kids about spending and saving money and even introductions to investing.

• Mydoh – Powered by RBC bank, this app helps kids earn by completing tasks, being smart with their spending, and keeping track of the money. Parents can introduce their child to their very own spending card. This app does charge a small fee.
• Walo – Another app with an available pre-loaded card designed with kids in mind. Walo empowers your child to save and rewards consistent goals. This app charges a slightly larger fee than other similar apps.
• Treasure – This chore app encourages weekly payouts – kind of like a real life paycheque – in exchange for chores you’ve assigned. Similar to the other apps above, Treasure offers a spending card that can be tracked via the app. This app does charge a fee for the service.

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However you choose to educate your kids about the art of saving and potential risks associated with careless spending is completely up to you. But teaching kids about the value of money is an exercise they’ll continue to learn for years to come.