About the most our children learn in school about money is how to make change in grammar school. In high school we may take a finance class, and math may touch on loans a little bit. Even economy may briefly touch on individual finance. Other than that, it’s up to us to teach our children the basics of money and finance.

Start your children early. Started the education of money and finance sooner could lead to the development of strong saving habits, learning how to make smart purchases, the true meaning of a investment vs. an expense, and even why we can’t have what we want right now! Perhaps by the time they reach college they’ll have a clear understanding of how they got here, how to manage the money they have while they’re here, and how they plan to make it after graduation.

Money doesn’t grow on trees. While this is probably what you heard as a child, it explains very little. A child sees that mom and dad have money. That’s it. Start the conversation early about where it comes from. Mom and dad have to work for the money. And when it’s gone, it’s gone. We may not always be able to have a happy meal when and just because we want one. Even children at a young age can understand that money is given to you by working, and it’s given to you on a schedule. Some parents tell their children when pay day is. When pay day comes around, the child sees that we can perhaps go out to eat. But we don’t go spend everything at once. Children can comprehend a pay schedule, and what happens in between the schedule. If you don’t stick to it however, confusion comes in to play and the whole lesson may be lost.

Allowances are a sticky subject. Experts do not agree that allowances should be given for daily household chores, because those chores will have to be done in life, and we don’t get paid to do them. Consider paying your child to help outdoors, washing the car, rearranging a room. Make a list of available chores he or she can do and how much the chore pays.

Now is when you want to start a piggy bank. When the child protests about the newest super water gun, inform him that the water gun probably isn’t going anywhere, and he might just be getting close to having that much money saved. He can always pick up some more odds and ends around the house to get money faster.

When there is enough for him to buy the guy and some left over, consider taking him to the bank to open his first savings account. Most banks have programs setup to make this a fun experience for kids.