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In the current climate of rising costs, it has become important to learn savvy money skills to help you balance your budget rather than relying on credit to cover shortfalls. Learning how to manage your money better is not only a good idea, but teaching your children is just as important.

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You can start this process as soon as your child asks you to buy things. This means you are ready to start learning about money, but before you can spend it, you need a way to make it. Pocket money is often the first way children receive money. Decide whether to associate it with age-appropriate chores or give it strictly as a learning tool. I’ve found that it takes a lot of tracking before paying my kids to relate their pocket money to household chores.

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50 cents to $1 per week per age is a good rule of thumb, depending on what you can afford and what your child is expected to do with their allowance. children receive $4 a week and 10-year-olds receive $10 a week.

Then select how you want to manage your benefits.

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Starting by giving them cash to put in their piggy bank makes for a more visual lesson. As they get older and understand the concept of e-banking, I recommend switching to automatic weekly transfers to their own account, or to an account jointly with you.

Then encourage your child to come up with a goal for what they want to buy. This is a good way to teach children about savings and delayed gratification and is worth learning before they are old enough to access credit.

For example, let’s say the toy they want is $29.99 plus tax. In Manitoba this would be $33.59. Help me calculate how many weeks it will take me to reach that goal, considering how much money I will receive from my weekly payday. Consider creating a savings goal poster so you can visualize your progress.

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As children get older and become more interested in spending money, teach them the time value of money. This adjusts how long someone has to work in order to earn money to buy items.

We used this tactic with our own children whenever we needed a new item we didn’t need. It helped them understand that there are limits. It will be a great opportunity to teach.

You can make this easier by allowing them to do extra chores and earn extra expenses. Instead, make sure they understand that the work they are doing exceeds normal expectations and therefore generates extra cash.

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Another option to help impatient kids reach their goals faster while teaching them about credit is to lend them money. Before doing so, be sure to set the terms of the loan. The amount of the payment, when it will be paid, how long the child will have to pay off the debt, and so on. Do not set payments so high that there is no allowance left for weekly spending/savings.

For older children, take a little interest in teaching them about the cost of debt. Show your child’s progress by tracking payments until the loan is paid off. Let them know that you can pay off your debt sooner if you want. And if you’re charging interest, you can teach them how to reduce your total repayments by doing so.

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By taking your kids shopping regularly, you can learn how to be a smart shopper. It gives them a good chance to understand how much things cost, how comparison shopping works, how to budget within limits, and the role marketing plays in spending choices.

While they’re happy to come shopping with you, share your best tips and tricks with them or learn together the best ways to save or wait for what you want to sell. Let’s start

Above all, remember that your child sees everything you do and learns your attitude towards money from you. Don’t worry too much and find yourself relying on credit to supplement your income. Contact a nonprofit credit counselor for free advice on managing your money. It’s never too late to learn.

Sandra Fry is a Winnipeg-based credit counselor at the Credit Counseling Society, a non-profit organization that has been helping Canadians manage their debt for over 25 years.

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