It’s never too early to start teaching your kids about money.  The earlier you can instill good habits in them, the more likely they’ll be able to manage their money wisely as an adult.  And this can be an easier subject to talk about than you might think—there’s no need to start off talking about stocks and loans and mortgages, etc.  Teach your kids the very basics now, and you can add on as they grow up.

Give Them an Allowance

A good place to start is with the usual allowance, but don’t give your kids the money “just because.”  Let them earn their money.  Give them simple chores like keeping their room clean, taking the garbage out, helping with the dishes, etc.  It can be very helpful to teach them early that money is earned.  It doesn’t simply appear in Mommy and Daddy’s wallets—you want to adjust that way of thinking before they’re teenagers!

Open a Kids’ Savings Account

The next step after the allowance is to teach them how to save.  They’ll quickly learn that if they spend their full allowance every week, they’re limited on the toys and goodies that they can purchase by themselves.  Try to give them their money in small denominations and help them determine how much to set aside every week.  You can have them keep it in a traditional piggy bank or even open a kids’ savings account to start getting them accustomed to using a bank and seeing their savings grow.

Set Goals

What’s the new hot toy right now?  Whatever it is, your kids probably want it, and it’s probably expensive.  Here’s an opportunity to teach them how to set goals.  Have them use the goal to determine how much they must save every week in order to purchase their new toy as soon as possible.  Perhaps you could offer them a special bonus on their allowance if they add another small chore or two to their list, as well.  Here, your kid will learn restraint.

Teach the Difference Between Needs and Wants

Maybe that new toy is just too far out of range for your kid to purchase alone; by time they saved enough, there would be a new hot toy.  Or perhaps it’s time for back-to-school shopping and it sounds like a good idea to have them purchase some of their own supplies.  Now is when you can differentiate between needs and wants.  They’ll learn that sometimes they have to hold off on the fun purchase and only buy what they need or can really afford.

Bargain Shopping

Take your kids with you on your own shopping trips, whether it’s to the grocery store or the mall.  You can show them how you look for bargains and compare prices.  It’s no longer taboo to look on the clearance racks, and buying the store brand can usually be a good idea; show your kids that saving money on purchases is a good thing.  (Be sure to also show them when you should avoid paying the lowest price, when it means sacrificing quality!)

As they get older, you can open a checking account with them and teach them a little more about interest and the real world of finance.  They’ll be pressured more and more as they grow up to have the newest fashions and the hottest electronic gadgets.  If you’ve taught them at a young age to manage their money wisely, they’ll be more inclined to choose when to indulge and the right time to save—and how not to expect Mom and Dad to pay for their indulgences!