Teaching kids about money management is one of the most important life skills you can give them. Start early by giving them an allowance and letting them make decisions on how to spend it. Help them open their first bank account and teach them how to budget their money.

Once your kids are ready for an allowance, sit down together and come up with a reasonable amount based on their age and responsibilities. Let them decide how they want to allocate the money between spending, saving and donating. Help them open three jars to physically separate the money. This makes the concepts of budgeting and saving more concrete.

Take your kids to open their first bank savings account. Have them put in money from their allowance and show them how interest helps their money grow over time. Explain how banks work and how the money is used. This helps demystify the concept of banking and investing for them.

Set a good example by talking about your own budget, saving and investing goals. Explain how you allocate your income and why you make the financial choices you do. Kids often mimic parents’ behavior, so model the financial habits you want them to learn.

Once they get the hang of budgeting their allowance, start giving them opportunities to earn and manage more money. Give them jobs to do around the neighborhood for extra cash. Help them set financial goals to save for bigger purchases. Provide guidance but let them make the decisions.

Teach your kids about the difference between wants and needs. Help them understand that they can’t buy everything they want and have to prioritize how they spend money. Discuss the difference between instant gratification and delayed gratification. Help them become savvy consumers.

Discuss how interest works and the power of compounding returns. Show them the difference between saving money in a regular savings account versus investing it for potentially higher returns. Explain the risks and rewards of the stock market in an age-appropriate way.

Make money management part of your daily conversations and activities. Discuss prices when shopping, how much things cost and how to save money. Play money-centered board games together. Continuously reinforce the lessons you want them to learn. Developing good money habits early will benefit them for life.