The 1, 2, 3s of Financial Literacy

Teaching children about money is as important as teaching them about health, according to Kelley Keehn, personal finance expert and author of The Prosperity Factor for Kids. And parents bear the greatest responsibility for this type of learning.

"We don't have financial education in our school system so it has to come mostly from the household," Keehn says. "You're not expected to be a financial expert ... [but] be curious if your child asks something or you think you should be teaching them something and get on the Internet and Google it together."

Here are some fun family activities for children of different ages.

Age 4 - 6

Pennies to dollars
Take turns rolling dice and handing out a matching number of pennies. Once a player accumulates five pennies, trade them in for a nickel. A nickel and five pennies become a dime. A dime and 15 pennies become a quarter. The first person to get a loonie wins.

Foreign exchange
Get a sample of currency from another country. Look at the colours and pictures on the bill. Talk about the different denominations and their names. Count out an equivalent value in Canadian money. Then post the foreign bill on a map of the world to show your child where it comes from.

Age 7 - 10

Goal thermometer
Encourage your child to set a short-term goal for something he or she wants to buy — it could be anything from a special toy to an iPod. Then hang up a goal thermometer that marks out progress towards the purchase price. Once a week, help your child count out the money in his or her piggy bank and colour in the appropriate section of the thermometer.

Age 11 - 15

Needs vs. wants
Give a child paper, a pen and five minutes to make a list of all the things they would "need" to buy to have fun at a picnic. The list may include everything from a tasty sandwich to a new video game. Help your child separate "needs" from "wants." Children who learn to differentiate between what they need and what they want at an early age carry that lesson into adulthood, where it can help them make better spending decisions.

Accelerate savings
Saving $200 can seem like an insurmountable obstacle to a child who gets a $10 allowance each week. Keep children motivated to continue working towards their goals by offering a matching grant if they can tell you the reasons why a particular purchase is important to them and good for the family. This is good practice for the day when they want to save a down payment for a major purchase, like their first car.

Age 16 - 20

File taxes
While filing an income tax return may not seem like much fun to you, helping your child fill in his or her first form to report income from a job can be an exciting and empowering milestone. It also means your child can start accumulating RRSP contribution room, which can be carried forward to future years. Children who are 19 or older may also be eligible for the GST/HST credit.

Practice credit
When you think a child is ready for the responsibility of a credit card, consider adding him or her to your own card as a secondary account holder. Using CIBC CreditSmart tools, you can monitor spending and set up alerts to notify you when your child is approaching the budget you set.

Learning About Money - Milestones by Age:

Age 4-6
  • Discovering the value of coins and bills
  • Saving in a piggy bank
Age 7-10
  • Setting short-term goals
  • Establishing saving priorities
Age 11-15
  • Understanding needs vs. wants
  • Setting longer-term goals
Age 16-20
  • Grasping the concept of taxes
  • Learning about credit and debt

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