Canada | Financial Literacy

Teach your kids to handle their allowance like a pro

Whether you give your kids a digital transfer or a cash handout, use these tips to help them understand the value of their pocket money

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cute little girl saving money by putting coins into piggy bankHelp your kids set limits. Use one card (or one jar) for savings and another for spending. (Shutterstock/People Image Studio)

Parents can use allowance as a tool for teaching kids about both digital money and cash, says Li Zhang, principal, corporate citizenship, at CPA Canada. It’s all about connecting at age-appropriate levels, she notes. 

“It starts at age four, when they can learn the value of money through handling currency and coins,” she explains. “Then, it moves to more sophisticated lessons all the way to the early 20s, when people start their adult journey with money.” [See Should you give your kids a digital allowance?]

And whether e-transfer or paper money is the allowance of choice for your family, personal finance expert Bruce Sellery, author of Moolala: Why smart people do dumb things with their money (and what you can do about it) and parent to nine-year-old Abby, suggests making time to discuss the ins and outs of allowance. 

Below, Sellery offers six tips for parents when it comes to allowance:

1. Don’t judge kids for the junky stuff they buy. Instead, let them make their own purchasing choices, then use your parental judgment to limit their use or consumption of questionable items.

2. Don’t supplement allowance with extra cash when you feel like it. Instead, teach your kids to plan, prioritize and make trade-offs so they can afford what they really want.

3. Don’t think of allowance as a reward for chores, behaviour or academic success, and don’t withdraw it when they miss the mark. Instead, think of money as an important tool you’re teaching them to use and find more natural consequences for poor choices.

4. Define clearly what you are willing to buy for your children, and what extras you expect them to buy with allowance. Then, stick to the plan!

5. Help them set limits. Use one card (or one jar) for savings and another for spending.

6. Practise browsing without buying. Instead of avoiding the mall altogether, expect your child to handle the disappointment of going home empty-handed. 


CPA Canada’s How to teach your kids about money financially literacy session helps educate adults with the goals and challenges of raising money-smart kids.

Your child’s teacher can also invite a CPA volunteer to lead financial literacy workshops at their school. With content specifically designed to meet the different learning needs of elementary school students, secondary school students and post-secondary students, the workshops are 45 to 60 minutes long and are available across Canada for free. Share this article with your child’s teacher to get the ball rolling.