While Canadian parents may be striving to achieve financial freedom as well as the “good things in life”, we may be forgetting about what we are teaching our children. New studies are showing the correlation between a parents’ attitude towards money and how this impacts the child’s spending habits when they become adults.

A recent study out of the United States has reported that while 80% of parents described themselves as positive role models regarding money issues, only 19% had actually discussed issues such as budgeting with their children. As well, 48% had discussed the difference between ‘wants’ and ‘needs’, 36% revealed that they had never discussed any financial issues with their children.

While children will ultimately make their own decisions (and mistakes!) parents can help instill some sound financial ideals in their children.

By simply being aware of some of the basic financial pitfalls, they can make better choices earlier on in life, and hopefully avoid those that quickly lead to a large debt. It’s also a great opportunity to help your child develop a healthy attitude about money, i.e. money doesn’t buy happiness.

It’s natural to want to buy our children things that maybe we didn’t have as children, but we also want our children to have respect for money and not be “spoiled”.

The following tips are a guideline for not only discussing financial responsibility with your children but also for parents to understand how their child may view the family’s financial patterns.

Credit Cards

We are all bombarded with television advertisements and mailers regarding “low or zero interest rate” credit cards. Very few teenagers or young adults understand that this is a “teaser” rate and generally will rise to up to a 20% interest rate. At the appropriate age, you may want to get your child their “own” credit card on your account, with a low spending limit; this way you can monitor their expenditures, and help teach them how to be responsible with credit. As most college/university students will obtain credit cards, this will offer your child the experience beforehand of being able to manage credit and not get into debt that they cannot afford to pay off.

Discussing Money

Most teenagers will “tune out” if their parent(s) is yelling at them about their spending habits. Talking to them in a normal voice, and explaining where they made a mistake, instead of berating or using guilt, will usually accomplish a more positive result. Realize that mistakes will be made; by calmly explaining what happened, and what a better alternative would have been, will allow your child not only to learn more, but it will foster a more positive environment where your child can feel comfortable talking to you about money.

Bribing Your Child(ren) With Gifts

It’s normal for parents to buy their child a gift or give them money as a special reward for achievement but beware of using this method every time. You cannot expect a child to understand the “value of a dollar” if they grow up with the expectation that every time they do something well, they get something. A better alternative is to discuss the price of the specific item they want, and then agree on what the appropriate amount of chores is required in order to earn it. This method allows your child to learn early on to associate the monetary worth of the items they want.

Lead By Example

Whether you intend to or not, your child will mimic your spending habits. For instance, you cannot expect a child to be responsible with credit cards if he/she has grown up in an environment where parents are constantly complaining about how high their bills are. This also applies to saving habits and budgeting. If you don’t already have one, make a household budget, and discuss it with your child.

Shopping Is NOT Entertainment

Teenagers especially can have the tendency to view shopping as a social event. While “hanging out at the mall” is not a problem, having your child view having to spend money in order to have fun can be a problem later on in life. Try to expose your teen to other forms of “fun events” that don’t require them to spend money.


This is a skill that will last your child a lifetime. Even with young children, giving them an allowance, and showing them how to keep track of their spending, can teach them this basic concept. As they grow older, you can help them introduce items such as savings, etc. If your teenage child gets a job, sit down with them and help devise a budget that gives them a savings component, as well as budgeting for clothing, entertainment, etc.

By talking to your children about finances you can give them the tools they need later on in life.

Also, include financial mistakes you have made; this will allow them to see that no one is perfect, and hopefully, they will learn to avoid the errors you have made.

By ensuring an environment where your child can easily and comfortably talk to you about money, they will be better prepared for when they are independent and have to be in control of their own financial destiny.

Contact us to learn more, or see this Teaching Children About Money article, courtesy of the Financial Consumer Agency of Canada,

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