Little girl puts coins in a glass jar.
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How We Plan on Raising a Money-Smart Child

Sep 15, 2017

The spawn comes up to me with a gleaming quarter in her tiny palm, “Look Mummy! I found a Pup Tag!”

I smile for two reasons: first, her avid imagination and obsession with the show Paw Patrol, and second, the irony of her misidentifying money. My daughter was born with a curse-blessing — she has two accountants for parents.


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Oh, all the things she’ll have to learn about taxes, RRSPs, investments, mortgages and retirement planning. She’ll have nowhere to run, nowhere to hide.

The idea is simple: set up three jars, one for spending, one for saving and one for sharing.

While we may not be able to give her sage advice on a budding musical career, we can surely give her all the sticks and stones required to build a solid financial foundation. As she gets older, we plan to gradually introduce strategies to ensure she develops a healthy relationship with money, and understands that it is a tool to help her achieve personal goals, and not the end goal itself.

Our first step would be the three-jar system. I was introduced to this idea by writer, television show host, and personal finance guru Gail Vaz-Oxlade. The idea is simple: set up three jars, one for spending, one for saving and one for sharing. This set up allows children to visualize the money they have accumulated and understand that spending means reducing it.

Our plan is to give our daughter the choice to distribute her allowance between these three buckets, giving her decision-making ability over her finances from a young age, and helping her understand the ideas of indulgence, prudence, and generosity. These are good lessons for a child to have in their back pocket for the rest of their life.

Purchasing or sharing gently used items redirects them from landfills into happy little hands and is the earliest lesson in financial prudence, social responsibility and generosity.

This set-up will also allow her to understand and appreciate the pain and gain of saving. Saving requires willpower, discipline and patience, as well as an inherent understanding of time to achieve a particular savings target, say, buying a coveted toy. In our present times of credit cards, lines of credit and buy-now-pay-later schemes, this is an integral idea to pass on to our children: save now, and buy later. It instills self-control and the ability to truly enjoy an item or experience you purchased with saved funds, instead of stressing about paying off the resulting debt. In addition, to incentivize savings, we plan on a setting up a matching program, a mini-RRSP if you will. For example, for every five dollars she saves, we will add two dollars to the jar.

The last jar is self-explanatory. Choose a cause that moves you, and share your wealth. We will educate her on these causes but she will have autonomy in picking the one closest to her heart.

For now, the one financial concept we have introduced to our three-year-old is an indirect but important one: reuse, recycle and share. Our daughter has played with gently used toys given to us by friends or coworkers. In turn, she has happily picked out toys to share with a friend, and her prettiest baby dresses to give to her new cousins. Purchasing or sharing gently used items redirects them from landfills into happy little hands and is the earliest lesson in financial prudence, social responsibility and generosity.


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Lastly, my husband and I dislike the idea of tying chores or homework to money. Incentivizing responsibilities sets up the wrong expectations for a child in school, and eventually in the workplace. Instead, our plan is to penalize unfulfilled responsibilities by removing access — to TV time, playtime, and when she is old enough, to WiFi (cruel and unusual punishment, I know).

Money can be a difficult concept for parents to discuss with their children, and in many ways, we want to protect them from these complex, grown up and often challenging considerations. However, financial literacy is a key life skill, and one that should be taught at home, and as soon as a child is mature enough to understand the concept.

Article Author Yumna Siddiqui-Khan
Yumna Siddiqui-Khan

Yumna Siddiqui-Khan is an accountant by day, and writer and amateur photographer by night. A Toronto native, she now resides in Ottawa with her spouse and their 3-year-old spawn. Her photography, musings on life and the lessons learned through parenting can be found at the Institution of Parenthood.

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