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No one is born with innate financial wisdom. Being smart about money actually comes from lessons learned in the household—parents are the first financial advisers of their children. From budgeting their allowance to saving up for a favorite toy, these foundation skills ensure that kids grow up to be mindful of money and have spending habits that will keep them financially secure for the rest of their lives. It is never too early to instill responsible spending. Here are some lessons you should be teaching your children about money and debt:

  1. Money does not grow on trees. 

This has become such an overused statement, but it is still a great graphic representation that money is earned. Although you are obligated by law and by love to provide for your children, to give them money when they need it, they should still know where it comes from, and that it is a finite source.

It is easy for them to think otherwise when they see parents get cash from an ATM or buy groceries with a credit card. How then do you teach this valuable lesson? By making your kids work for extra money, you can show them the concept of earning. They can do chores at home outside of their regular duties and receive compensation for them. Examples of chores that do not fall within a child’s regular housekeeping are painting the fence or cleaning the garage. Be careful not to compensate them for chores that they normally do or else they will expect payment for every task.

  1. Patience is a virtue.

Especially when it comes to buying what you want. Children should learn this early on, as this is an often-overlooked value by parents who feel that saying “no” means depriving their kids of what their hearts desire. Even grown-ups have trouble with delayed gratification, yet this is an essential life skill. The ability to wait and save first before buying anything is critical to avoid overspending or worse, being deep in debt.

One activity that teaches saving and budgeting is by setting up three jars for your children. One is labeled “Spending,” the second “Saving,” and the third, “Sharing.” When your kid receives birthday money or cash from chores, he can equally divide this among the three jars. For inexpensive items such as candy or comics, the spending jar may be used. The sharing jar is for a friend or family member in need of some money. The saving jar is for bigger items such as a new scooter or video game.

  1. Don’t be a king for a day, pauper for a lifetime. 

Those who have poor financial management skills are guilty of this, which could lead to what is commonly known as living paycheck to paycheck. Receiving a salary or bonus and spending it all in one go not only makes one financially insecure, it can also cause bankruptcy. You have to teach your children how to budget and be wise in spending, so that they always have money left for emergencies.

One way your kids can learn this is by showing them how you plan what to buy before going to the mall. Create a budget for the grocery and use coupons or discounts when available. Be transparent about how you set aside money each month for bills, food, gas, and other necessities. Walk the talk — show your children that you only buy luxuries when there is some money left outside of daily expenditures and savings. Exhibit that you keep track of your finances by having a notebook or computer file that show your credit and debit.

  1. Credit is good, but cash is better. 

Instruct your children about the pitfalls of using a credit card. If you decide to let your kids practice financial independence by letting them use a credit card, you must remind them to pay off the balance in full each time it is due. Talk to them about interests and penalties, and how a $50 debt can become twice as much if it is not paid on time. Teach them to be wary of “too good to be true” payment schemes and how high interest rates can drown you in debt if you miss a payment.

Advise your children that if they cannot afford to pay for it in cash, they might have trouble paying for it in the future. The card should only be used for emergencies and should not be thought of as a credit limit as “real money” to be used anytime.

  1. Think long-term when saving. 

Explain to your children the benefits of putting away some cash regularly and how this grows over time. As long as it remains untouched, if the money set aside is $100 a year starting at the age of 14, one could get $23,000 by the age of 65. This becomes bigger the earlier your kids start saving up.

You could even offer the option of a savings account whose accumulated interest your children can spend however they want. Show them the rewards of long-term saving by talking about opportunity costs — by saving now, they can eventually buy lifelong investments such as a car or even a house.

These five tips are a good start to creating great dialog between you and your children. It’s important to teach them these life lessons before they get into financial trouble.

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