This article is the first in our series “Talking to Children About Money,” where we explore a variety of topics related to money such as the importance of talking to kids at an early age, games to teach money skills, using credit cards, debt education, and why it’s important to invest.

The first article explains reasons it’s important to have the “money talk” with kids early.

3 Reasons to Talk to Children About Money at an Early Age

By: Judy Cohen

“It’s just a 99-cent app and $1 is not that much money.” “I really want this toy because all my friends have one.” Does this sound familiar?

Teaching kids good money habits is no different than teaching healthy eating habits or good manners. The earlier they understand that money is earned and not just assumed, the faster they’ll begin to appreciate its value.  And kids who learn about money early will likely have healthier financial habits later in life, when it counts even more.

Like discussing where babies come from, talking to our children about money can be an overwhelming task.  But it’s one you need to take on.

Here are 3 concepts you can begin to introduce at an early age:

There’s more to money than spending – parents have a tremendous influence over their kids, and not just by the words they use. Children love to copy their parents to feel like a grown-up. But sometimes, actions speak louder than words, especially when it comes to spending money. From a very young age, children see parents spend money on everything from groceries to electronics to clothing and more. Most items are necessary while some are just nice-to-haves. To a child, however, there is no distinguishable difference. As parents, it’s critical to demonstrate all the roles money plays in life such as saving, sharing and investing; not just spending. Allowing children to experience all aspects of how money works will ensure they have a healthy understanding once they begin to earn their own.

You earn money by working hard – working for a living is a necessary life skill, much as bathing and brushing teeth. Children need to learn that the reason their parents can give them the things they need (and want) is because they work hard to earn money. Parents should begin this process by sitting with their kids and creating age-appropriate household chores so they can experience the same rewards for their hard work. This will go a long way in their understanding that life is not something that is handed to you on a silver plate, especially if you don’t have the money to buy the silver plate.

Make good spending choices by understanding the difference between “wants” and “needs” – let’s face it, if given a choice of how to spend money, most kids will choose a “want” over a “need” any day (think in-app purchases). It’s not entirely their fault as like some adults, it’s how they’re wired. While the role of a parent is to guide their child into adulthood, children must be able to make their own choices in life (good and bad), and this includes how they spend money. If not, they’ll never learn from mistakes. If you take the time to help your child understand the difference between a “want” and a “need” they will be the first to realize if they made a frivolous choice or not. If they’re not certain, use this time to talk about the pros and cons of making spending choices and encourage them to use their common sense.

No age is too young to start talking money with our children, and the earlier the better. Turning these discussions into “teachable moments” is key to instilling a lifetime of healthy financial understanding and responsibility.

About Lemonade Day

Lemonade Day is a non-profit dedicated to teaching every child across North America the business and financial skills that are the key ingredients of entrepreneurship. By learning these skills early in life, children will be better prepared to be successful, financially healthy adults. Through our fun, hands-on program Kids K-5 are empowered to start their very own business—a lemonade stand—and experience the feeling of earning real money, using 100% of their profit to spend, save and share based on their own goals.

Lemonade Day is in 62 cities throughout the United States. Over the past 10 years, we have served more than 1 million kids in our kid entrepreneur programs and in 2016 alone, 101,000 kids participated in Lemonade Day.

Visit LemonadeDay.org to learn how to participate in Lemonade Day in your city.