How to Teach Your Child to Save Their Allowance

My toxic trait is thinking I need to buy a coffee every time I leave the house. That meme fits me perfectly, and apparently the double-latte habit is contagious: my 10-year-old daughter, Matilda, has picked up a similar impulse to spend on drinks. Her weekly five-dollar allowance vanishes fast when her friends — who are allowed off school grounds once a week — bring back bubble tea for her. When she discovered her coin purse was nearly empty, I started to wonder whether I’m modeling poor habits or simply failing to give her practical money skills.

Many parents share that concern. A recent survey by Mydoh, a kids’ saving and spending app, found that more than half of Canadian parents felt their own parents didn’t teach them enough about money and budgeting. Nearly half said they had to unlearn unhealthy financial habits, such as prioritizing wants over needs. That recognition makes it clear: teaching smart money habits early is important.

Teaching kids about earning—and spending

Until now, Matilda’s experience with money has mostly been observational. She sees me tap my phone to pay and her father swipe a card, so she understands money leaving our accounts. What she hasn’t seen are the longer-term conversations: saving for retirement, planning for a family holiday, or setting concrete savings goals for big purchases. Kids don’t need to know every detail of adult finances, but being included in age-appropriate financial decisions helps them form healthier habits.

Research indicates that children who grow up in households where money is a closed subject — or where financial arguments are common — are more likely to carry debt into young adulthood. In one Canadian study, 15-year-olds who discussed money with their parents at least weekly scored significantly higher on financial literacy tests. Those findings convinced us it was time to be more intentional.

About six months ago we introduced an activity-based allowance for Matilda. She earns five dollars a week if she completes a list of chores posted on the fridge, from making her bed to clearing the dinner table. That structure teaches responsibility, but it wasn’t enough on its own: we hadn’t clearly defined what her allowance was for, nor had we discussed different ways to save. I also found myself caving to small digital purchases — like Robux for online games — which showed we needed clearer rules and better communication.

Setting a spending goal

The main objective is to curb impulse purchases and teach Matilda to set and reach larger financial goals. Delayed gratification is a key skill here — although it’s a hard sell when the choice is today’s bubble tea versus a future treat. Studies show several important money habits, including the ability to delay gratification, solidify at a young age, so early practice matters.

To start, we chose short-term, concrete goals that make sense to a child. Matilda picked a new book in a favourite series as her first savings target. It’s a modest purchase to us, but it’s meaningful to her — the perfect first milestone to learn planning and persistence.

There’s an app for that

We compared prices online so Matilda knew exactly how much she needed, including taxes. Then we estimated how long it would take to reach the goal based on different amounts she might save weekly. To track progress and make the process engaging, we downloaded the Mydoh app on her tablet and my phone. The app includes game-like features, a savings calculator, and printable chore charts that reinforce the link between effort and reward.

From my parent account I can send pocket money, assign tasks tied to her allowance, and monitor her goals and spending. The app’s enhanced savings-goals feature lets kids name goals, set target amounts, and pick dates to reach them. That visibility has been powerful for Matilda: she can see the book’s price, watch her balance grow, and decide how to balance small treats with longer-term goals.

Matilda is now close to reaching her first goal. When I asked whether she’d missed bubble tea, she said, “Kinda, but next week I’ll still have enough after I buy my book to get a small brown sugar milk tea!” She’s worked out the math and chosen moderation over total sacrifice — a practical, realistic approach that feels like real progress.

Read more about kids and money:

• 6 strategies for teaching kids about money
• Ages 18+: Teaching your adult child about paying for school
• RESP vs RRSP and TFSA: What’s the best option for education savings?
• Canada’s $10-a-day daycare program: A guide for families