Teaching children about money is never an easy task. Perhaps you don't feel confident about your own money-management skills. However, you probably know a little more about directing cash than you think. From the time that children begin comprehending money (which is around the same time they learn to count) until they move out of your home permanently, your financial actions will play a critical role in shaping their attitude toward money. Teaching and encouraging children to become regular savers, thrifty spenders, and savvy investors will help them lead a financially fit life in the future.

1. Introduce them to money as soon as possible. If they can distinguish between dollars and coins, they can learn about money. Explain to young children what's happening when you're making transactions at the grocery store, the bank, and other places. Observation and repetition are two ways by which children learn.

2. Communicate about money values. Teach them about the differences between checks and cash. Show them how to save for something that they want. Explain to them how to make money grow with interest and investments. Teach them how to spend it wisely.

3. Needs, wants, and wishes. This concept is particularly hard for young children to learn, but will help them immensely in the future. Helping them to differentiate between what is necessary, what is desired, and that which is out of their price range may take some time. Teaching them the differences will prepare them to make good spending decisions in the future.

4. Setting goals. Teach your child that patience is sometimes needed when it comes to getting what you want. A child's request for entertainment or a new toy can be turned into a lesson about goal setting. When they perform chores or earn an allowance, show them how they are advancing toward their goals with a written record or a chart. Teaching a child goal-setting techniques helps them learn how to become responsible for their decisions.

5. Teach children to save. When giving them an allowance, use denominations that encourage saving. For example, if the amount is $5, give it to them as five 1-dollar bills, then encourage them to set aside at least $1 in savings. Explain and demonstrate the concept of earning interest on savings. You can even offer to "pay interest" on money children save at home. When you add "interest" money to their piggy banks, help children to calculate how fast their money is accumulating. Older children may even be allowed to open a savings account.

6. Allow them to make spending decisions. Whether their decisions are good or bad, children can learn from making their own spending choices. When they have approached you regarding the spending of cash, you can engage in an open discussion of the positives and negatives before any money exchanges hands. Do not try to use guilt as a deterrent, but do encourage them to use common sense. This may mean showing how to do research before making purchases, putting a halt on purchases for a "thinking period," encouraging them to wait for the right time to buy, or reminding them of things they might miss out on if they spend their money now.

7. Teach them about bills. If a child asks what you are doing when you're paying your bills, explain that it is like paying for something in advance or after someone has done something for you. Try to make comparisons they can understand. For example, compare paying a cable bill to trading money for the TV shows you watch. Making late payments on your bills can be compared to turning in late assignments at school. There are repercussions for being late in many aspects of life. For teenagers, you can explain about how paying your bills on time can give you a good credit rating for when they ever need to borrow money for college or a car.

8. Borrowing and paying interest. Naturally, the negatives of borrowing should be covered when having this important talk. Better yet, you can teach them by demonstration. If your child ever asks for a small loan for an event or special item, you can charge them an amount of interest. They will learn quickly how expensive it is to borrow money over a period of time.

9. Credit Cards. When one covers borrowing, it's hard not to cover credit cards. When paying for a meal at a restaurant is an excellent time to explain to children about how credit cards work. Then, when the bill comes in the mail, you can show them how to verify the charges. This will help to teach them about putting a halt to credit card fraud in their adult lives.

10. Teenage Bills. More teens have jobs these days. They also tend to have cars, cell phones, and credit cards, all which result in bills. It is important that teens learn about managing their own finances while they're still living at home. When they first have a job and bills to pay, go over their finances or balance their checkbooks with them. Help them track their gas, entertainment, and food expenditures in addition to their bills. Use it to help them make a budget. Then, once you feel they have the hang of it, let them do it on their own and check in periodically.

Having regular talks with your children and teenagers about money can have a phenomenal impact on their future financial practices. This is just the tip of the iceberg when it comes to the topics you can discuss with your children as they learn about money. It's never to early or late to speak with your children about basic financial concepts. Teenagers can even grasp what's happening with the local and national economies, how to rein in costs within the home, taxes, and more. All of this information will help them as they begin to take on responsibility for their own finances. You never know what they can understand until you speak with them.

Sara Duane graduated from the University of Minnesota, Morris, with a BA in English in 2003. She is as a freelance writer & editor in central Minnesota.