A while back, I was at the grocery store doing my weekly shopping and got behind a young mother with two kids in the checkout line.

As I patiently waited for her to complete her transaction, I couldn’t help notice her talking to her kids and helping them retrieve loose change from a resealable freezer bag to give to the cashier.

You see, each child wanted an ice cream sandwich and mom had them pay for the snacks out of individually-named baggies with their cache of available money.  As they counted the money and paid it to the cashier, I inquired about her methods regarding the kids.

She told me that she wanted the children to understand the use and value of money and that they had to learn to make decisions on how to save and spend it. She also mentioned that every penny in each of their bags was earned by doing work around the house—not just something cute, but actual contribution.  The kids were 5 and 3 years old.

If only this were more common…

In my experience, most people don’t know the economic realities of life—at least what is manifested by their behavior.  It’s just a fact that many people don’t understand the rules of how money is made and spent in order to provide for the needs and wants of the household and its members.  Just as we learned (or didn’t learn) how to manage money from our parents, so we pass on the competence or incompetence in financial affairs to our children.

Talk to your kids.  Sit down with them and have a conversation about the relationship between production and the money earned from the job.  Talk to them about the principles summarized in The Golden Route.  Open a savings account for them and put them in charge of understanding that money goes in with deposits and goes out with withdrawals.  When they are old enough (say, 10-12 years old), have them start working in your private practice and earning an actual paycheck.

The young mother above sets an incredible example of how parents can introduce the economic realities of life to their children, regardless of age.  No matter whether you have twenty-something’s living at home or toddlers, you can teach them lessons in the realities of life: hard work, pursuit of excellence, thrift, prudence, and above all, personal responsibility for their own condition in life.

Help your kids become self-reliant and financially competent.  There are many ways to do it, and if you don’t, unfortunately they will learn the hard way. That may be just one of the most important gifts you ever give them.

For more information on teaching your kids about money – listen to my podcast where I interview The Money Couple®, Scott and Bethany Palmer, on: How to Talk to Your Kids about Money at Any Age. CLICK HERE