Building financial literacy begins at a much younger age than many parents think. Research demonstrates that children as young as age three can understand basic money concepts such as spending and saving.

Indeed, many children’s spending and savings habits begin to solidify as early as age seven, making it important to help children build good money habits from early childhood. With this in mind, parents do well to start lessons in financial literacy early. 

This doesn’t mean buying your toddler a subscription to The Wall Street Journal, however.

Here are 6 simple, age-appropriate activities that help build kids smart money habits that can last a lifetime.

Bring Back the Piggy Bank

Everyone remembers the satisfying clink of coins hitting the bottom of the piggy bank. Bringing back the good, old-fashioned piggy bank makes for an excellent starting point when it comes to teaching the youngest children about the power of savings.

Indeed, there’s no need to stop with only one porcine tool. Provide more than one piggy bank: one labeled for saving for short-term spending desires, such as a new toy, and a separate piggy for longer-term savings goals. This teaches children how to prioritize what really matters to them financially.

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Opening a savings account for your child where they can deposit a portion of their allowance weekly begins teaching children how to make their money work for them. Print out paper bank statements to review on a monthly basis with the kids as they watch their savings grow.

Once they have gotten into the habit of stashing away money weekly, their satisfaction in viewing their savings grow can serve as a jumping-off point into discussions about making smart investment decisions to grow savings even more quickly by investing in mutual funds or CDs.

Be Aware of Your Example

The conventional wisdom that children learn more from what they see their parents do than they do from what their parents say has been proven true by any number of research studies. Kids learn best from observing how their parents behave in given situations, and a child’s money management skills or lack thereof stem largely from how they’ve watched their parents manage household finances.

Include children in activities such as paying bills. This serves two purposes. Involving children in bill paying teaches them how much they will need to live comfortably when they become adults, and watching you balancing the checkbook teaches basic math skills to boot.

Despite some schools now offering at least some classes geared toward financial literacy, the vast majority of schools still fail to teach necessary skills, such as how to pay taxes. Involving kids come tax time helps prepare them for one of life’s less pleasant realities.

Best Finance Apps for All Ages

Parents today enjoy a host of personal finance tools they can take advantage of to help teach children the importance of making sound financial decisions. There are many great personal finance apps for children of all ages.

For younger children, here are some great apps that allow children to tackle basic money tasks

  1. The “Greenstreets: Unleash the Loot!” allow children to tackle basic money tasks such as budgeting and charitable giving.
  2. The “Bankaroo” app lets kids track the money they earn from chores, so they can see their saving and spending habits.
  3. The “Yuby” app helps older kids track earnings from things such as babysitting or lawn mowing and helps them budget their savings for items they want.
  4. Once children reach the age where they begin paying certain bills, such as their car insurance, here are some apps to remind them about their bills. Go Grocery Shopping

Involving kids in household finances begins with the simple weekly trip to the grocery store. Involve children in clipping coupons for foods they enjoy so they learn how to seek out bargains. Encourage children to help with the grocery list while explaining the difference between economic needs and wants. Give older children a figure they must stick to at the store to teach them how to budget for necessary items while allowing for the occasional candy splurge.

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Likewise, when budgeting for family vacations, get children involved. Share airline ticket prices and hotel room rates, and let children join in divvying up the remaining travel money for activities they enjoy. Allow each child an allowance for souvenirs, then let them spend it how they like — blowing their entire spending wad on the first day of vacation teaches volumes about the importance of saving for tomorrow.

Communicate Clearly and Honestly

Finally, bear in mind that children remember the lies parents tell them as much as, if not more than, they remember the truths parents impart. For that reason, avoid misleading children about financial matters.

If difficult economic times strike the family, share with children what parents must do to dig themselves out of the hole, and invite them to come up with creative suggestions for increasing household income. Likewise, when a bonus or tax refund leads to an unexpected financial boon, involve children in deciding how to spend and save the extra cash.

Bringing It Together

Teaching children positive money habits from an early age helps them to make responsible financial decisions later in life. The best time to learn about the value of money occurs when children remain safely under their parents’ wings — not when they’re adults and money mistakes cost far more.

Remember: financial literacy begins at home, and it’s never too early to point children on the path to savvy spending and saving practices.

Disclaimer:This post is sponsored by PSECU, a Pennsylvania-based credit union.