(TNS)—When it comes to teaching children about the value of finances and saving money, the earlier you can do so, the better. It’s important to start them out as young as possible, since it instills in them good money skills, building a foundation of financial responsibility that can last into adulthood and a lifetime of smart decisions.
However, 74 percent of parents are seemingly reluctant to talk to their kids about money matters, according to Forbes.
If you’re unsure how to go about talking to your son or daughter about how to save money and finances in general, don’t worry; there are lots of simple, fun ways to teach your children to be financially responsible at any age. Here are the easiest ways to teach money lessons to your kids.
Talk with them
One of the first things you can do to teach your children about money is to talk with them about it. Even as young as ages 3 and 4, you can begin to teach your children the difference between needs and wants. “Kids can start the process of understanding money at an early age,” says Gary Swim of Swim Retirement. “Even toddlers will understand that you get money by working and you need money to buy things.”
“Try having these conversations with your children early and often. It will make it easier for everyone and help them develop an understanding of finances at a young age,” says Brad Sherman, a financial planner with Sherman Wealth Management. Don’t hesitate to involve kids, especially when they get a bit older, when you’re sitting down to pay bills online or work on the monthly budget. This will give them exposure to the hands-on way you manage the family finances.
Give them an allowance
LaToya Scott of Life and a Budget gives her 6-year-old daughter an allowance not tied to any chores. “We simply give her money so that she will learn how to manage it properly,” says Scott. “She can earn additional money from random jobs around the house to accelerate her savings.”
When your kids get old enough, though, they can start earning an allowance for chores or small jobs, like cleaning around the house, babysitting, mowing lawns and more. Create a progress sheet or a goals board to hang on their bedroom wall that tracks how much they’ve earned according to the work they’ve completed. This will help children learn the value of earning money themselves for something they want to buy.
Match their earnings
Your young one might be years, or even decades, away from tapping into a 401(k) of their own, but it’s not too early to start them on the concept of contributions and matching dollars when they begin saving money.
“Encourage them to save by matching their savings dollars,” says Jeff Jones, a certified financial planner. “If they need to save $100, offer to match them dollar-for-dollar up to $50. Be sure to put a cap on how much savings you are willing to match. If they prove to be exceptional savers, you might find yourself hustling to keep up.”
A simple alternative to dollar matching is the tip method. Similar to how you’d tip at a restaurant, give them some extra money for a job well done on their chores. For example, if their chore was to clean the bathroom for $5, you could give them $2 extra, adding up to $7, if they did an exceptional job.
Use the “three piggy bank” method
Most kids have a piggy bank on their dresser or nightstand to fill with coins, but as we all know, one savings account isn’t usually enough as we grow up and our financial needs vary.
Lori Craig, market director for PNC Bank Wealth Management, recommended setting kids up with three piggy banks: one for saving, one for sharing and one for spending. “A spending bank is for money to be used on everyday things,” Craig says. “A saving bank is for money to be used in the future, or on a big-ticket item. And a sharing bank is to be used to help others or to give.”
If you have younger kids, you can help them decorate their banks with stickers, photos or cutouts from magazines that show them visually how the money inside will be used, said Craig. For instance, if the “savings bank” is meant to hold money for a new bicycle, it should have a picture of a bike on it. Using these visuals is a tactile way to remind your children of their goals and what they need to do to work towards them.
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