Most parents think the “birds and the bees” talk will be the hardest conversations that they have with their children. But, equally as difficult and complex, is the discussion that they will have about the value of money. According to Certified Financial Planner Tracy Redmon of Ameriprise Financial, it is never too early to start “incorporating your values about money” to your children.

“The first best place to learn about money is at home,” says Redmon. “Involve your children early…it will help them for the rest of their lives.”

How do you get them involved? Here is what you should be discussing with your kids at different stages in their life:

Age 5-8: Even at age five you can begin to explain the concept of money. Once children can count, it becomes easy to relate that skill to money management.  When out shopping, let your child count the money and hand it to the cashier. Ask your child questions at the grocery such as, “Which one of these is cheaper. What can we buy with $5?” Encourage them to start saving coins in a piggy bank and count their savings. 

Ages 9-13: Now it is time to help them understand where money comes from.  Explain how you make money and what you do with the money you make. Let them go through the process by taking them to the bank to deposit a check and letting them help pay the water and electricity bills. Explain how it is important to share money with those less fortunate and include them in this process. It is also a great time to have your child start his or her own savings account. Most banks and credit unions offer this with no fees and no minimum deposit.

Ages 14-18: It is now time they work for it. They understand Mom and Dad work for money, but do they understand how hard it is? Help them find a part-time job doing something they enjoy. Instead of giving them an allowance, tie the allowance to the completion of certain jobs around the house such as giving them bonuses for good grades or good behavior. Offer to match their savings (the idea is to provide an incentive just as an employer might do in the future). Use real money, even if it is a small amount, and teach them how to invest it and the power of compound interest.

18 and Beyond: Although they are no longer children, they still look to you as a role model, especially in money matters, says Suze Orman, financial expert and author of The Road to Wealth. “Parents, I know you want the best for your children,” she says. “So you should realize how much that means making sure you have got your own financial act together. Children who watch parents do stuff like ring up huge credit card bills buying goodies and vacations they can’t afford tend to dig the same financial holes themselves as adults.”

Kid Friendly Money Websites:

www.kids.gov – Designed for children to learn how to earn and spend money, and explore careers.
www.kidsbank.com – Interactive tools, games and calculators for kids of all ages.
www.younginvestor.com – Includes information for teens and parents.

This is a weekly featured post on Own The Dollar from Sara Peak, a Certified Financial Planner and a veteran of the finance industry. In addition to her monthly “Money Matters” column in Kentucky Living magazine, she also writes about money and personal finance topics on her blog.

Be sure to look for more great featured articles every week from Sara.  If you have a question or topic that you would like for her to discuss, please contact us.

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© Own The Dollar – This posting originally appeared on the blog, Own The Dollar. Visit the website for more great content.

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