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Turn the Tooth Fairy into a Teachable Moment

By Melissa Cassar

Thanks to cherished family traditions like birthday celebrations and presents from Santa and the Tooth Fairy, today's children are often bombarded with gifts from an early age. In fact, many kids begin cashing in on their baby teeth before they've even grasped the concept of what money is and where it comes from.

Most parents will wrestle with knowing how much is appropriate to give, as well as how to best teach our kids to appreciate what they are receiving, whether it's a gift, a necessity (like clothing or braces) or the allowance they earn. The goal is to share the joy surrounding the exchange of gifts while at the same time using those occasions as teachable moments that will help our kids learn how to manage their money in the future.

For example, a good lesson to instill early in life, such as when the Tooth Fairy visits or they get a birthday cheque from their grandparents, a small percentage goes to charity right off the top to help those less fortunate.

Another portion goes into their savings accounts to help them save for big-ticket items they want; and the rest is theirs to spend or save as they please. Try to allow kids to make financial decisions and mistakes on their own in a safe environment before the stakes become too high.

If your kids are too young to open a bank account, you can introduce them to the idea of dividing up their money for different purposes by using the Money Savvy Pig, a clear plastic piggy bank with four compartments (save, spend, donate and invest) that was created by Money Savvy Generation ( www.msgen.com ).

As your kids get older, start having discussions about:

• What earning money means, using your own job and their allowance as examples.
• How to budget for planned and unplanned expenses.
• Needs versus wants – and the concept of delayed gratification.

And finally, remember that kids often mimic their parents' behavior, good and bad, so if they see you spending beyond your means to buy gifts, they may follow suit later in their own lives.

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This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

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