It’s never too early to begin imparting financial wisdom to your children, and it’s essential for their long term success. Helping them understand the value of a dollar, as well as developing smart spending and saving habits, are lessons that will shape their attitude and behavior toward money in the future. Besides, if you don’t teach your kids how to manage money, they will have to learn the hard way through years of trial and error.

If you want to set up your kids for future financial success by sharing with them important financial concepts, here are some strategies and tips that will help.

Ages 3-8: Introduce Them to Money

This is a great time to begin teaching your children the basics of money. In this age bracket they should begin understanding the concept of counting. Visuals are important, and most experts agree that using a clear piggy bank or jar helps them see their money grow as they add more, it will also teach them how their money shrinks when they take any out.

Give them real-life examples, like taking them with you to the grocery store. Let them hold your coupons and help you find the bargain items. Young children love to play, so set up a pretend store in your living room. Use toys or other items as products and let your child shop with money from their piggy bank. This will help teach them the basics of commerce and how quickly money can disappear if you spend too much.

Ages 9-12: Earning & Spending

By the time your child reaches this age group, they’re beginning to understand the principle of cause and effect. They are able to see that money is tied to items, that parents/guardians go to work to earn money, and that some items cost more money than others.

Reinforce their understanding with more real-life examples. If you decide to give your child an allowance, let them earn it by doing certain chores. This drives home the fact that money is earned, not merely given. When they want a new toy or pair of shoes, let them decide which they want to purchase. Help them asses their current level of savings (money from chores), and then decide how much money they are willing to withdraw in order to buy what they want. And speaking of savings, if you haven’t set up a savings account for your child, take them with you to the bank and get one set up for them.

Teach them the pitfalls associated with impulse buying. If you’re out shopping and your child says, “Mom! I really want these shoes. Look at them, they’re beautiful!” Tweens are great at this, especially when it’s your money they’re spending. Rather than caving and buying it for them, let them know they can buy it if they use their own money. Encourage them to wait at least one day before deciding to make the purchase. This will help them to learn how to separate their emotions from their spending habits.

Speak with them about the importance of giving. Let them decide if it’s a church, charity, or someone they know who really needs help. They will soon learn how giving is a two way street, benefiting both giver and receiver.

Ages 13-18: Debt and Building Wealth

When your child reaches their teen years they have a solid understanding that money comes from working. Up until now, the only money they’ve earned came from you in the form of an allowance. Finding a job outside of parental control will take them to the next level of personal responsibility and accountability.

Once they are earning their own money from outside employment, hand over to them complete control of their bank account that you started for them when they were younger. Now, their money management skills will also go to the next level. Doing all of this while they’re still living at home is perfect, because if they make a huge mistake they won’t end up living on the street. Better to learn the lessons now, than later when they’re out on their own.

As your child approaches the last years of high school, and they plan to go to college, sit down with them and discuss how their education will be funded. Explain to them how student loans work, and if possible, avoid them altogether. Encourage them to set up their own college savings account and contribute to it as much as possible. Putting up some of their own money will help them be more vested in their future.

Another important topic to cover with your teen is the power of compound interest. I know that may sound like a tall order when you can barely get your teen to look up from their phone and acknowledge your existence, but the sooner your teen begins to invest their money the better. They will thank you for it years later, I promise.

Teaching your kids financial concepts isn’t easy, no matter their age. It will take a lot of time and effort on your part, but it will be worth it. For the most part, schools don’t teach any of these concepts, at least not to any real depth. So, you are the best chance your children have for a bright financial future. Sound financial skills are essential for navigating life and thanks to your efforts, your children will be off to a great start.

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