Everything I needed to learn about money, I did NOT learn in kindergarten…

My 5 year old has been thinking about money a lot lately. Or at least he’s been focused on how he can get the money he needs to buy things. You can tell money is on his mind by his latest comment he shared with me.

“I think we should get some paper and color it green. Then we should write ‘infinity’ on it and take it to the store. No Star Wars lego set costs infinity, so we can buy whatever we want.”

I’m so glad my son has grasped the basic concept of exchanging money for goods and services. Not so glad, however, that he’s devised his own counterfeiting scheme… although he does show initiative.

So, at what age do you start teaching your kids about money? What lessons do you teach them? As far as age goes, it depends a great deal on the interest your child shows. Are they asking to buy things? Are they talking about how many ‘monies’ something costs? Do they want to help with the transaction at the store? If they’re showing this kind of interest, you can certainly start introducing them to the concepts of buying power.

As for the other lessons you want to teach them… well, that’s up to you. But I’d be happy to recommend a few like earning money, goal setting and systematic savings. In your child’s lingo, that may sound more like, how do you get money, saving for something special you want to buy and money you can’t touch… for a really, really long time.

For my wife and I, we really started our money lesson thoughts based on the effectiveness or ineffectiveness of what our parents taught us… or didn’t teach us. For example, my parents taught me at an early age that I could earn money. They helped me set up a savings account, but they didn’t really teach me about systematic savings, nor was much emphasis given to goal setting. And if my parents are reading this … I’m sorry. We are still invited to dinner next week, right?

Ok, you want your kids to be in the know about money matters. So, what’s the approach? Here are three things to keep in mind when teaching your kids about money.

Get involved. Your children will eventually learn something about finances, but wouldn’t you rather the lessons come from you? Do you really want your child going off to college not knowing how to handle a bill, manage the money they have or make an investment? Or worse yet, do you want them saying, “Oh, mom or dad will just send me whatever I need”?

Make it a hands-on experience. Lectures and deep discussions aren’t going to captivate your child and may even turn them off from learning about money, so put some money in their hands and make it very real. Include them in the financial decisions you have to make, starting with the lighter ones of course. And give them opportunities to make their own financial decisions… ‘carefully guided’ financial decisions. It’s best to do this while they still live at home and you can help them learn life’s lessons. Let them understand that they may need to save longer and/or do extra chores to earn enough for that special toy. Allow them to explore what their money can buy. You may not see the value in yet another toy, but it’s important in their eyes.

Be a good example. If you want your child to learn an important financial lesson, you need to show them that you can live by it too. How’s that systematic savings plan working for you? Share your financial success stories with them and help them understand how the actions you’re teaching them can help them have the same success. If you want your children to save for school, show them that you can help them save for their education too. And, just to be fair, you’ll probably want to share some of your failures too, so they can see the consequences of mismanaging your finances.

So, what do you do now? Do you have some creative ways to help your children learn about money? What lessons do you wish you had learned as a child?