It’s never too early to teach your kids the value of money, especially of honest, hard-earned cash. This way, you won’t wake up late at night, ten years from now, worrying for your son or daughter who has been caught in some financial trouble. Here are a few tips on how to instill financial common sense to your children:

Children as children can understand better if you put ideas in more concrete terms. They won’t understand those hifaluting economic words. Be simple in your explanation. You may use their favorite bedtime story or cartoon characters to illustrate particular situations.

Involve your children when it comes to making financial decisions. If an issue arises, include your children in the discussions. Clearly explain the situation and ask for suggestions. If necessary changes are called for, then these should also be explained and made understood to them. Children
can easily sense tension in the family so don’t even bother to try hiding your problems. Kids can also be creative and practical problem solvers.

When it comes to spending, teach them the difference between “want” and “need.” They have to understand that “needs” are more important than “wants,” and that “needs” get first priority. Make a list of things that they think they “need” and things that they just “want.” Discuss each item on
the list and let them explain their reasons for labeling them as such. However, if they want something badly enough, make it clear that they can always work hard for it.

Give your children (age-appropriate) allowances (you may also employ wages based on errands and chores they have done) so that they would learn how to budget their money. As they grow older, you can even give them responsibilities. For example, your teenagers can take care of their own cell
phone bills, or gas money if they already drive a car. In this case, encourage your children to get after-school or summer jobs so that they know how good it feels to be financially independent.

Don’t forget to include lessons on savings (and even investing) when you teach your kids about money management. They need to understand (aside from paying bills and spending) that the more they save now, the more secure their future will be.