Chances are most of your financial education came from experience—both good and bad. If you want to help your children avoid the same financial pitfalls you may have fallen into start teaching them good money habits now.

Watch how you talk about money

If you find yourself arguing with your spouse or children about money, stop! If money is tight, let your children know in a non-threatening way. Explain to them what you can and can’t afford right now and suggest other ways they can get what they want.

Give your kids their own spending power

Since most of us learn by doing, an allowance can give your child the chance to learn about handling money while the stakes are still pretty small. Financial advisors point out that having a regular amount of their own income is the only way kids can learn to manage money. They also say that the purpose of an allowance is to give your children the opportunity to learn how to manage money through their own successes and failures with the input of their parents.

Allowances can still be a tricky subject: how much, how often, and for what? Ultimately those decisions are yours, but following some guidelines might help. Most experts agree kids can handle an allowance by age seven or so, though some children start receiving an allowance in kindergarten. Only you can really determine whether your child is ready for an allowance and it’s best to sit down with them and explain what that responsibility means. When deciding how much allowance to give, you’ll want to be sure you both understand what the allowance must cover. School lunches? Snacks? Computer games? Extracurricular activities? For older kids you may want to add clothing or bigger ticket items to the list. Write it down so there is no “confusion” later!

Chores or no chores? Many parents have strong views about whether allowances should be tied to chores. Some parents won’t pay an allowance unless the weekly chores are done. Others view chores as something kids should do as part of a family, and not something for which they should be paid. It’s up to you, but whatever you decide make sure that you are consistent and have realistic expectations about what they can handle.

Use real life to teach your kids

There are many opportunities as you go about your day-to-day life to teach your kids about money. For example, you can have your kids help you:

• Calculate the tip in a restaurant. If they are too young for that, let them count the tip or leave it on the table.

• Double check the money you take out of the cash machine by counting it. Ask them to remind you to enter it in your checkbook register when you get home.

• Keep track of what it costs to feed and care for the family pets, or create a budget for a new pet they want.

• Plan a special evening meal within a fixed budget. With your children, plan the menu and shop for the food.

• Clip coupons. One mother lets her child clip coupons and for every one she uses, he gets to keep half the savings!

• Tell them you’ll only buy their favorite treats when they are on sale, of if you have a coupon. Show them how to use the sales flyers from the newspapers to hunt for bargains.

• Research prices for something they want by hunting for it on the Internet, or noting prices in a couple of stores.

• When they are old enough, have your child help you balance your checkbook or enter your checks in your checkbook register when you pay the bills (make sure to double check the math).

Want more financial tips? You can learn more about this subject and view other financial education resources on our website.