Practice makes perfect: Tips for forming good financial habits early

Growing up we are told that practice makes perfect. We spent hours practicing reading, writing, musical instruments, sports, and even long division. But how many of us practiced money management, budgeting, or good banking practices?

As humans, we tend to learn by example. So as a parent, teacher or role model to a young person, it’s never too early to begin introducing financial literacy into your child’s routine. This can be done in a number of different ways, however below are a few suggestions to help you get started.


There’s a thought process that goes into every purchase we make.  When you’re out shopping, don’t be afraid to share this thought process with your children. Start off with simple scenarios in the grocery store. An example could be:

“Pasta sauce is on sale this week. I noticed that we were running low at home, so I’ll buy it today when it is on sale, and keep it in the cupboard.  That way, when we run out, I won’t have to pay a higher price when it is not on sale.” 

This will teach the importance of paying attention to prices, budgeting, and planning purchases ahead of time.

Another example may be discussing why you’re buying a house brand product over a branded product.  By simply saying, “I find this tastes just as good as the brand name version and it’s a dollar less,” you will help reinforce the idea that the name brand isn’t always the best or preferred option.


Opening a savings account for your child at an early age teaches them how to make deposits and shows them how those investments can grow over time. Better yet, open a savings account for them which pays them interest. This will show them how money can grow even without continuous contributions. The interest will be low in today’s environment, but even a small amount of money can be significant to a child. This will teach them that having savings is something to take pride in and that saving money can be just as enjoyable as spending it.  


Giving your child early exposure to budgeting will help them to appreciate that income isn’t limitless and that expenses have to be carefully managed. After you have allocated your income to cover all of the household necessities, allow them to participate in deciding how to spend any excess money left over on activities with the children.  For instance, if there is $50 to spend ask if they would rather go for ice cream twice during the week, or go to a movie once. Make sure that saving the money is also presented as an option.  For example, explain if you saved $50 this month, and combined it with $50 next month, your family could partake in a larger activity.

Including your kids in parts of household budgeting teaches them early on that difficult financial decisions have to be made and that saving now can pay off later on.


This one is a bit different from the tips above, as it has a payoff beyond the knowledge gained. It has the same effect as Tip #2, but with direct financial benefits as well. A Registered Education Savings Plan (RESP) is a savings and investment system designed to help Canadians save for their child’s education. The earlier that an RESP is opened, the better it is for you and your child. There are several benefits to having an RESP, but the top ones are receiving the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB).

The Canada Education Savings Grant is a government contribution that matches 20% of an individual’s contribution to an RESP, up to a maximum of $500. If you contribute $100 in a year, the government will contribute $20 to the RESP. If you contribute $2,500 or more in a year, the government will contribute $500. The more yearly investments you make to the RESP, the more CESG you will receive.

The Canada Learning Bond is an amount that the government contributes to an RESP even if you don’t contribute anything. To qualify, you must have a modest household income and have opened an RESP.  Eligible children will receive an initial $500 deposit to their RESP, as well as an extra $25 to cover the cost of opening the RESP.  They will also receive an additional $100 for each year of eligibility until a maximum total of $2,000 from the Canada Learning Bond has been received.  

RESPs can be spent on expenses related to a wide range of programs, including college, university, and many trades and technical schools.

If you’d like to learn more tips to teaching children financial literacy skills, or you would like to improve your own knowledge of money management, check out the Financial Consumer Agency of Canada’s website for more resources.

At Grant Thornton Limited, we also offer free financial literacy education presentations and webinars to schools, organizations and community groups. To learn more about our community presentations or to schedule one for your organization, visit our Community Presentation page.

Financial literacy is acquired through learned skills. And like all skills, the sooner someone starts practicing, the more time they have to perfect it. Often, I meet with people who’ve never been taught financial literacy – which can lead to poor money management. While we teach our clients these skills during two financial counselling sessions, it is best to learn these skills early on, so they become habits, and overwhelming debt can be avoided.

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