It’s never too early to start talking to your kids about money. In fact, the earlier you start, the more they could benefit. Just as children tend to learn new languages more quickly than adults do, building good habits at an early age is easier, too.

Parents, or primary caregivers, play the biggest role in shaping children’s behavior and how they think about their finances. Lessons you teach them today can last a lifetime.

Here are some tips to get you started:

  1. Make it a regular conversation. Share the everyday money moments with your kids. If you’re at the grocery store, show them how to compare prices of different brands to get the best deal, or have them help you find coupons for their favorite snacks. You could even have a family competition to see who can find the best bargains. And if you’re at the bank, depositing money into your savings account, tell your kids why you’re putting that money away.
  2. Explain the difference between “wants” and “needs.” A good early lesson is separating luxuries from family necessities. Explain that groceries or a car to get to school and work are needs, but getting that new toy is a want. This is also a great opportunity to talk to your kids about savings, and even start a savings jar or piggy bank with them.
  3. Find teachable moments. Researchers are increasingly pointing to teachable moments — the learning moments that happen to be just in time, right before or at the moment you are faced with making a financial decision — as an opportunity to reinforce good financial habits. For you, this might happen when you’re signing up for direct deposit with your job and someone in your human resources department explains all the benefits of signing up for a 401k retirement plan at the same time. For your kids, the teachable moment could be when you give them their allowance, or if they receive a financial gift for a birthday.
  4. Help them make concrete goals. In an ideal world, kids would save all their pennies for meaningful expenses like tuition for college — but that’s tough for them to conceptualize. If your kids get an allowance, this is a great time to introduce the concepts of budgeting and saving. Make it a rule that your child has to save a small percentage of their allowance (it can go in a jar or piggy bank). Have them pick a near-term goal of something they really want, so they can see the reward of those savings. They may not need that toy, but you’ll be reinforcing a habit of waiting, or delayed gratification, until they have the money to pay for that little luxury.
  5. Reward them for reaching goals. After they pick a savings goal, reward them for reaching milestones. For example, if they make it halfway towards their goal, maybe you add an extra quarter to their jar or provide them with a small treat. Just make sure you start with identifying what they’re saving for and how much they’ll need.
  6. Open a savings account. Once they’re old enough, and they’ve saved enough, you could help them open their first savings account. Much like a house, savings are a type of asset, something that you own and from which you can gain economic benefit. Proponents of childhood savings state that kids who have such accounts are more likely to find the value in building assets later in life. What’s more, researchers suggest that having assets like a savings account can have a powerful effect on future planning.
  7. Make it fun! There are plenty of free games or apps (with recommended ages ranging from 5 to 13+) that will help your kids understand money. There are even cartoon music videos that teach kids to save. If your kids are young adults, our course on Building Your Financial Future is a great place to start.

Is there an area of personal finance that you’d like us to cover in a course or Fast Financial Fact? Where do you struggle with managing your finances? We’d like to know! Please get in touch at education(at)lendup(dot)com.

Disclaimer: LendUp is not providing financial, legal or tax advice. If you need or want such advice, please consult a qualified advisor.