I knew I needed to have the first of many family finance talks when my oldest, then four years old, said, “Just stick your card in the machine, Mommy.”

I had just shared that I didn’t have any more money to spend for something he wanted. My son’s response informed me that he believed the flow of money was endless, that a person just obtained more because he asked for it, or in this case, used a debit card. It was time to teach him the basics of our family finances.

Discussing family finances doesn’t mean you need to share the specifics of what you earn, save, and spend. Rather, it means utilizing your money management system as a framework to teach your kids how to make financial decisions with the money they are given or have earned. You can:

1. Begin discussions now.

Planting the seeds of financial awareness early pays off. Kids are more likely to adhere to their budget and respect yours.

​2. Explain your family’s goals and priorities.

Examples are paying yourself first, contributing into a retirement account, purchasing stocks, and saving up for a special purchase or vacation.

​3. Talk to your kids at their age level.

Use a puzzle “pie.” Create a large circle on paper. Create a second one and cut it into wedges. Color (or use construction paper) and label (use clip art or stickers for younger kids) the wedges to represent categories like savings, bills, discretionary or fun, taxes, and charity. Explain how the full circle represents the money you have to work from monthly, it is the total. Add the wedges in so they have a visual of where the money goes and they understand that the wedges can’t be more than the whole pie; otherwise you’re living outside your means. If your child pushes for an amount, pick round numbers. We used $100, because we planned to teach them about the monetary system.

4. Talk about the differences between cash, savings, and investment.

Keep it simple for now, but do introduce them to the concept of interest and how it can impact cash, savings, and bills.

​5. Discuss the dangers of credit.

Help your kids understand that the decisions they make in the short run about money management can impact what happens over their lifetime.

​6. Teach kids the money basics.

Have your kids help wrap change in the paper coin rolls. During the process you can teach them about how money works; for example, that there are 100 pennies in each dollar, and five in each nickel, and 20 nickels in each dollar. This exercise is fun for the kids, and they get to brush up on their math skills, too. We’ve discovered that teaching our kids about money at an early age compelled each of them to be conservative with their money.

​7. Teach money management.

Do you count your change when it’s returned to you? Do you go over your receipts at the checkout or in a restaurant? These are great examples of accountability and responsibility, and teachable moments for your kids. Ask them to help you.

8. Use allowances as teaching tools.

Our kids have been taught to put aside one-third for something they want (discretionary spending), one-third aside for savings, and one-third towards charity and gifting. When the discretionary runs low, they buckle down and save. This is the foundation for when they begin to earn a regular income.

​9. Set up savings and checking accounts.

Make sure you are on the account as well. Teach your kids how to keep a ledger and reconcile accounts. When they are older and responsible enough add a debit card with limits, preferably before they leave the nest so that they understand how it all works and what the ramifications are if abused.

​10. Have ongoing discussions as they grow up.

Finances are important. Money impacts a person throughout their lifetime. Kids will become savvier about finances and money management if they have a good understanding of how it all works.