Most parents worry about the right time to teach their children about money. Whether or not your child loves having fake coins or cash registers as toys, it’s your job as a parent to introduce financial responsibility to your child.

Research from the University of Cambridge shows that children have their money habits set at 7 years. Once certain practices become the norm at this point, it becomes difficult to reverse them. It, therefore, means that parents need to begin teaching their children about money during their preschool years. 

In fact, kids begin grasping basic financial literacy concepts at 3 years, so it’s never too early to start teaching them. Taking trips to the store, ATM, or bank is a perfect opportunity to open discussions with your child about how to spend money. 

Here are 4 simple and fun ways to teach your child about money:

1. Introduce Basic Concepts at a Tender Age

The earlier you start your child’s financial education, the better. Once your child is old enough to know not to stick pennies in their mouth, that’s the time you need to introduce notes and coins. Make them understand what money is and how we use it. Allow them to make purchases with cash. You can, of course, help your child think through their purchase and what they can afford. 

2. Create Opportunities to Earn Money

Children need to have their own money to make independent spending decisions. Giving your child an allowance makes them accomplish that. However, you can have your child perform certain chores to earn their allowance. After all, everyone values their hard-earned money. Whatever your approach is to make your child earn their allowance, the intention is to give your child the opportunity to handle small amounts of money by themselves.

3. Instill a Saving Culture

Although it seems counter-intuitive, you need to encourage your child to spend so that they can save. If you dictate that they save for their long-term goals, it may feel as though their money is getting confiscated. Encourage your child to identify what they want and allow them to buy with their money. When they pick more expensive stuff, jump in and show them how to create a saving goal to purchase the item at a future date.

4. Discuss Your Child’s Spending Decisions

You can explain “opportunity cost” by identifying all the items your child wishes to buy with their money. Accordingly, explain that saying yes to one thing means doing away with all the other stuff. After that, you should allow your child to buy whatever they want, no matter its short lifespan. That way, they’ll learn that patience means an even better treat in the future.  

Therefore, positive money habits in your child mean having you as a positive role model while you demonstrate excellent money habits. It also means having age-appropriate money talks at home and allowing them to have real-life experience handling money through play. Practice these money-handling techniques with your child, and you’ll be well on your way to having a responsible money manager in the future.