One of the biggest favors that parents can give to their children is teaching them about financial responsibility while they’re young. Habits that are imbibed in people at an early age tend to stay with them forever. So, if you want your kids to make smart money decisions when they become adults, start the lessons as soon as possible.

From allowances to investing for kids, here are some tips on how you can effectively instill proper money management habits in your children.

Find ways to integrate money into your daily family life.

Every day is an opportunity to teach your children about money and how to spend it wisely. Many parents choose to discuss money matters in private, out of their kids' earshot. However, letting them in on some of these activities and conversations should give them a better understanding of how money works.

Taking your children with you when you go to the groceries or pay your bills will open their eyes to financial responsibilities. You can also show them how you budget for the household to give them an insight into where the money goes.

Stress out the value of saving and encourage wise investments.

Money management is not only about smart spending habits; it is also about saving and making your money grow. What’s exciting is that parents can now impart to their children the value of saving and investing through more modern and convenient ways.

Piggy banks used to be the go-to method when teaching children how to save, but that was before bank accounts for kids were available. According to experts, setting up a bank account for your kids will encourage them to keep more because they can monitor how their money grows.

When the children are old enough to understand, you can start talking to them about investments and returns in a way that they can easily comprehend. There are plenty of resources and chore apps for kids that you can access online to make the task easier, even fun!

Use simple comparisons to teach your children how to be wise consumers.

You don't have to reserve the money management lessons for when the kids are older. You can actually teach your children how to be wise consumers at a young age.

How? The trick is to use comparisons and situations that your child can quickly grasp and understand.

Before your child buys something, make sure that you emphasize the importance of making the wiser choice. Teach them how to make the most out of the money they have by comparing prices and quality before purchasing.

Give your kids an allowance, but not more than necessary.

As they say, “Experience is the best teacher.”

The best and most effective way to teach your children how to handle money is to give them something to manage on their own. The amount, frequency, and terms of the allowance are all up to you but don't hand them more than what they need.

If you’re serious about instilling the importance of responsible money management, you have to stick to the rules. Disperse the allowance as scheduled and don’t extend them any credit when they finish it before the next one’s due.

As a parent, you also have to back off a little. If your children want to blow a week’s worth of allowance on a toy or video game, let them. This way, they get to experience the consequences first hand, learn how to be critical of their spending habits, and understand why they should live within their means.

Involve them in planning your household financial goals.

Another essential money management lesson to teach your kids is the value of long-term planning. Allow your children to witness how you set a budget for major expenditures like a new car or an upcoming family vacation. As much as possible, involve them in the decision-making process and explain to them how you came up with your choices.

It's also vital that they learn to identify which plans to prioritize and which ones can wait. Vacations, for example, can be rescheduled to make way for home repairs.

Practice what you preach.

You can talk to your kids about financial responsibility for days on end, but your actions will still speak louder than your words. Are you paying your bills on time? Are you truly living within your means? Are your finances in order?

Remember that your children are always watching you. You are their role model, so be sure to set a good example!

Author's Bio: 

Samantha Green is the Content Marketing Strategist for BusyKid, the first and only chore and allowance platform where kids can earn, save, share, spend, and invest their allowance. A mom of two, she enjoys spending time with her kids and reading books to them.