Tooth Fairy Teaches Financial Literacy
The Moment of Tooth: How the Tooth Fairy can teach your kids about money
Photo ONN
Losing a first tooth followed by a visit from the Tooth Fairy is a huge milestone in a child’s life. With piggy banks poising to chow down, how can parents determine the appropriate amount to give? Baby teeth are continuing to earn big bucks for little Canucks. Visa Canada’s 2015 annual Tooth Fairy survey indicates that the average price of a lost tooth is $3.44, a 23 per cent increase over last year’s payout of $2.80 per tooth. That puts the price tag for a full set of 20 baby teeth at almost $70.
This year, Practical Money Skills launched the Tooth Fairy App as a companion to the online calculator. While it isn’t intended to be an endorsement of how much money children should receive, the app and calculator use Visa’s latest survey data and demographic factors such as gender, age, province, family size, marital status, income and education levels to calculate how much money the Tooth Fairy is leaving in comparable households.
When the first baby teeth start wobbling, you and the Tooth Fairy can combine forces to teach your kids some basic money lessons. Here’s how the Tooth Fairy can help you guide your kids through their important, first-time money activities:
Learning to handle coins and currency: Kids need a bit of time to get to know coins and bills – what they feel like, what they’re worth and how they’re used. Start by letting them handle a few coins and then start identifying their value – how two nickels equal a dime and so on. Before a child can save, spend, invest or share, they have to understand the value of the money that the Tooth Fairy has left under their pillow. You might consider giving kids a piggy bank, or a series of piggy banks for specific purposes such as spending, saving or investing. Talk with your child about the importance of putting money away for a rainy day.
Making their first purchases: Tooth Fairy money may be a child’s first source of income. Teaching your kids about the value of money is an important lesson. It’s a chance to balance fun and priorities, wants and needs. Once a certain amount of money is set aside for savings, head to the store with your child to look for a small toy or treat. It’s important to discuss the item first and to encourage comparison –a good lesson in shopping for the best price. Once the item is selected, put the child in charge of the transaction.
Dealing with other monetary gifts: The Tooth Fairy often provides that first connection between kids and cash, but other money can be a popular gift for kids around birthdays and holidays, too. With every new source of funds, keep the conversations going on the importance of spending wisely.
Budgeting: As kids get older and start using money more extensively, introduce them to the concept of budgeting – the practice of tracking, counting and allocating spending. Parents might want to give themselves a refresher course if they’re not consistent about budgeting their own money.
Moving from piggy banks to real banks: Kids can keep a piggy bank around as long it’s effective, but they also need to learn how adults handle money. Regular trips to the bank or bank machine allow children to ask questions about how banks work and why they’re important. Eventually, they’ll be ready for their own savings account. See what account options your bank provides for young children.
Bottom Line: Lost teeth are an educational gold mine for your kid. You and the Tooth Fairy can work together to make each little windfall an important lesson about money.
For more information visit: GetSmarterAboutMoney.ca. This website is founded by the Ontario Securities Commission (OSC) that provides unbiased and independent financial tools to help you make better financial decisions. Story written by: Carla Hindman, Director of Financial Education, Visa Canada
