The lessons can be as simple as making a point of letting your children watches you handle money issues. Kids can even learn from little things like turning off the lights in rooms you are not using. The lesson happens on the spot when children ask why the lights need to be turned off. A parent who responds by explaining that electricity costs money teaches the consequences of leaving lights on.
You should put things at their level. Money is often a difficult concept to make concrete in this day of online banking, credit and debit cards. A smart way to make the payment for such purchases, which to a child might appear cost-free, is to show the child the bill. You can show your child the credit card statement, and then point out an item. You can then pull out your checkbook and show your child how you write a check to pay for that ice cream. Even if your child doesn’t grasp it at first, it doesn’t matter. It will take time and it’s worth it.
Young children should be shown a road map of how money travels from place to place. Kids can handle a little talk about money when they’re as young as 5 or 6.
The next time your child says, ‘I want that,’ explain to them that things actually costs money. You can then ask them, ‘Do you know where money comes from? How do you think it gets into my pocket? I go to work and I make money.’ Your child will listen because it’s about them and what they want. Children can often understand complicated subjects, even an explanation of taxes.
The worst mistake a parent can make about money education is to not teach them about choices. These lessons are not only about giving children a head start in learning to handle their personal finances. Such teachings also instruct children on behaving responsibly. This is a chance to explain how spending money relates to having responsibility for one’s own actions. Parents should teach kids about money the same way they teach them about taking care of pets.