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Lunar New Year: How red pockets can teach children about money

TD Bank provides guidance on teaching children the importance of saving money from a young age
This Lunar New Year in the Chinese zodiac is the year of the Dragon, symbolizing strength, courage, and good fortune.

As Canadians gear up to celebrate the Lunar New Year on February 10, ushering in the Year of the Wood Dragon, traditions of prosperity and fortune come to the forefront. 

One such tradition involves married adults gifting unmarried adults and children "lucky money" in vibrant red envelopes, symbolizing good fortune and happiness while also presenting a valuable opportunity to impart financial wisdom and improve children's financial literacy. 

Rather than simply handing out red envelopes, Jill Zou, District Vice President at TD Bank, Markham North District, encourages adults to engage children in conversations about money management, stressing the importance of distinguishing between needs and wants from an early age.

"Lunar New Year is a great opportunity to begin teaching kids about money and finances," Zou says. "It's never too early to start. Our advice is to begin with age-appropriate lessons that can help provide a solid foundation for children who will eventually need to understand and manage their own finances. We know it can be tempting for kids to want to immediately spend the money they receive in their red envelopes by splurging on the latest gadget or piece of clothing, which makes this an ideal time to help kids differentiate between needs and wants."

Understanding needs versus wants

When your child asks for pricey items while you’re out shopping, like an expensive backpack or a trendy shirt,  encourage them to use their savings. This will give them the opportunity to weigh the value of the item. Is it something they really need or just an impulse purchase? If they do decide to commit to making that purchase, consider having them pay in cash rather than using a debit card. By handing over their own cash, they're often more likely to see how much of their savings is gone and how much is left.

It's never too early to start

For younger children, it can be useful to make the act of saving more visual. For instance, you could use an empty jar or piggy bank and physically drop in bills and coins. When your child receives money for special occasions like Lunar New Year, get them to add some of the money received into the jar or piggy bank; this way, your child will be better able to understand how money accumulates when it is saved, rather than spent.

Teach children about how far their money can grow

Open a savings account or invest your child’s money and involve them when reviewing the statements. witnessing their savings accumulate from an early age serves as a powerful motivator to continue putting money aside. Demonstrate to kids that consistent saving leads to significant growth over time.

The importance of goal-setting

It is important for children to understand that saving money does not mean losing it; rather, it involves setting it aside for future use. When your child identifies their desire for a pricier item that someone else isn't going to buy for them, such as a new bike or a LEGO set, have them create a savings chart they can regularly review and update to see how close they are to reaching their financial goal. Ultimately, instilling the habit of saving a little bit each month can accelerate their journey towards achieving their goals.

"The arrival of the new Lunar Year brings great opportunities to make positive changes in our lives and the lives of our children", Zou says. "There are lifelong financial benefits to teaching kids about finances and money from a very early age. Whether they opt to save 30, 40 or even 50 per cent of their earnings, encouraging children to develop the habit of saving is an important lesson for them when it comes to building and maintaining financial health."

For more information on how TD Bank can help you and your family, please visit