Young children often have no idea where money comes from. All parents want to make sure their children have their needs and wants met, however what are you teaching your children about the value of money and hard work? It’s easy to pull out a credit card and have your wishes instantly fulfilled, but what kind of message does that send to your child? Remember that it is important to teach your children about money and investing. Your children are never too young to participate in their own financial success. Developing money and investing skills early will help your future success.

Be sure to set up a savings account for each child and have a plan. Even very young children understand the concept of a piggy bank. Set an allowance for your child. Let each child get paid for the chores she does around the house. Encourage them to split their earnings between a charitable gift, short-term savings for toys, pocket money, and long-term savings for college. If it may seem silly, establishing good investing habits in childhood can last a lifetime. A good balance for your children would be 10% charity, 50% short-term savings, 30% short-term savings, and 10% spending. As the child grows and her needs change, the percentages can be adjusted as they (and you) see fit.

Another great way to teach your child about money and investing is to have a family financial night. Make a list of all your monthly and weekly expenses. Write each expense on a separate piece of paper. Then add up the family’s income for the month. While fake money works well, if you have the real money available for a one-off presentation, it can really be eye-opening. Give the bills to your children and ask them to collect from you. This is a great picture of how money is spent within the family, how hard-earned paychecks are spent, and that money doesn’t really grow on trees. After the meeting, discuss with the children how everyone can do their part to reduce expenses and increase savings.

Initiate your children to invest. It takes very little money to invest in a mutual: $2,000 is enough to invest and make a small profit. Let your kids have their “own” investments and work together to track their growth or decline. Every dip and dip in the market offers good investing learning points. This will allow them to see that money can be saved and invested for the future. Be sure to encourage your children to work. For school-age children, it might be extra chores around the house or yard work. For teens it can be a part-time job after school. Letting children understand that money comes from hard work and should not be wasted is an important lesson. In addition, it increases self-esteem and pride. Families can also set up fun savings for items that benefit the whole family – a vacation, a pool, DVDs are also great things to save. Have a jar and post a progress chart. Each of these suggestions is a great way to teach a child about money and see the benefits of saving and investing.