Think back to those early days in life when it seemed like everything in the candy aisle was free if you begged your parents hard enough. Not a fleeting thought was given to the expenses of a vacation or the copay costs at the doctor. There’s something beautifully unburdened in the way which children experience the world: recklessly present and innocently ambivalent. Teaching your children lessons about money from a young age won’t crush that. What it will do is to set them on a path to future financial success with enduring financial concepts. Children’s monetary habits are formed as young as age seven according to a report published by University of Cambridge researchers. That means your children are going to learn about how to treat their money from someone, and it’s better for that person to be you, so you can guide the experience and activities.

Take them on errands with you. Regardless if it’s the farmers’ market or a visit to the bank, take your children with you. Yes, it’s easier to go without them, but these shopping experiences also teach them how to behave in monetary transactions. Engaging the children rather than dragging them along is the goal. Make a list at the grocery store and let them hold it and cross things off as an example of how to avoid impulse buying. If they’re old enough, ask them to read the prices on comparative items, like two boxes of cereal, and ask them which one is cheaper.

Let them pay. A lecture on how much things costs does little in comparison to experience. When your child wants to spend their birthday or allowance money on something help them first determine how much they want to spend compared to what they want. Help them pull out the correct amount of change from their money container and then let your child physically give the cash to the cashier. They’ll quickly understand how when you want something, you have to pay for it with “hard earned” money.

Use a clear container for saving. Piggy banks are cute, but a clear container allows kids to actually see the savings grow as the jar fills. When they deposit money into the jar discuss how much they added and congratulate them on adding to their savings. Keep your own jar close by and put extra change in it. Children are natural imitators and will want to keep putting money in their jar like you.

Spend, save, and give. Money isn’t meant just to be saved and with young children you have the opportunity to instill in them an ethos of giving early on. An easy way to do this is to get three large, clear jars and label them, one for spending, one for saving, and one for giving. Allow your child(ren) to choose a cause they care about to donate their “give” money to. Let them then see their money “doing good” if possible. For example, if the child decides to donate their giving money to the local animal shelter, take a trip to the facility to see the animals. (You could also incorporate concepts of giving time into this activity as well.) Develop a system that works for you and your family!

Set a goal. Invite your child to set a goal of something they want (a trip to Chuck E. Cheese’s, new toy, a video game). Look up the price and create a fun chart to keep track of how much they’ve saved toward the goal. For example, if they want a new doll create a chart with a picture of a doll in it and have the child color up to lines marked off with certain percentages so they can see how much has been saved toward their goal. Once the total has been reached, take the child to buy the item with their money. This is a valuable exercise in learning how to wait to buy something you want.

Teaching children about money isn’t always going to be easy, but it certainly will be worthwhile. A strong, knowledgeable foundation about money means a step in the right direction toward financial security as an adult.

1. https://mascdn.azureedge.net/cms/the-money-advice-service-habit-formation-and-learning-in-young-children-may2013.pdf
2. http://www.moneycrashers.com/teaching-kids-save-money/
3. http://www.familyeducation.com/life/money-and-kids/15-ways-teach-kids-about-money
4. http://www.wsj.com/articles/the-smart-way-to-teach-children-about-money-1422849602
5. http://www.bankrate.com/finance/personal-finance/raising-money-smart-kids-1.aspx
6. http://www.parents.com/kids/responsibility/money-management/lessons-teach-kids-about-money/

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