[IMGCAP(1)]By now our kids are well into the school year taking part in daily classroom activities. Whether they are learning their A-B-C’s or studying advanced calculus, as parents it is up to us to teach our kids one of life’s many great lessons: money management.

We are the primary influence on our kids’ financial behaviors. Teaching them about money management will help them develop the skills they need to be smart with their finances and wise spenders. It will also help shape them into self-sufficient adults equipped with the important financial skills needed to navigate life.

According to 360financialliteracy.org, children realize at a young age that money is used to buy the things that they want, even though they do not necessarily understand where the money really comes from. The best time to start teaching them how to handle money sensibly is as soon as they become interested in it. Every day brings an opportunity for simple money-teaching moments. The sooner we start incorporating those lessons into everyday life, the better off our kids will be.

A simple way to introduce the concept of saving money is to create three jars for each child labeled “Saving,” “Spending” and “Sharing.” Every time your kids receive money that is not for a specific purpose, divide it among the three jars. You can determine how much goes into each jar. With older children, you can decide the amounts together. Let your child use the money in the spending jar for small purchases. Money in the sharing jar can be used to donate to a cause of their choice.

To help them avoid spontaneous purchases, have them set a financial goal. Every time your kids add money to the savings jar, help them count up how much they have, talk with them about how much more they need to reach their goal, and how soon they will reach it. Beth Kobliner, author of “Get a Financial Life,” says, “Make sure it is a goal they can reach within a reasonable timeframe and not too far out in the future. Young children may lose interest in goals that take longer than a week or two to reach. Then it just gets frustrating, and it gets hard for them to wrap their head around. It is really more about her being cognizant that she is saving for a goal than, ‘Oh, I really need her to scrape together those $10 to buy the tutu.’ You want to set them up for success. All those behaviors are really fun for kids. It gives them a sense of the importance of waiting and being patient and saving.”

As they get older they will begin to understand the difference between long-term and short-term saving and will be able to set goals further out in the future, such as saving for a remote control car next summer versus new ear buds this month. Take them to the bank to open an account to help them learn how a savings account works. Many banks have programs that provide activities and incentives designed to help children learn financial basics.

In addition to learning how to save, your kids need guidance on how to make good spending decisions. Children are not born with the ability to spend money wisely, yet they are constantly tempted via advertising and peer pressure. To help your kids become smart spenders, help them do their research on what they really want and compare prices before they spend. Help them understand the importance and value of finding the best quality and deal. Have them think about whether they really want an item before they part with their money.

Take your kids with you when you go grocery shopping. As you shop, point out an item, help them find the price, and explain why you are choosing to buy one brand and size rather than another. This will teach them how to compare quality and prices. When all is said and done, even if you think your kids are about to waste their money on a fad that will soon become unpopular, you might want to let them go ahead and buy the item anyway, because it might just teach a lasting lesson.

“It is okay to let your kids make mistakes,” says 360financialliteracy.org. “If the toy your child insists on buying breaks, or turns out to be less fun than it looked on the commercials, eventually your child will learn to make good choices even when you are not there to give advice.”

Personal financial expert Suze Orman suggests that when you sit down to pay the bills, have your kids sit down with you. Share with them how much it costs to live in the house. This will not only help them understand that parents actually pay money to watch satellite channels and log on to the Internet, but it will also give them clear, concrete examples of what it really does cost for basic every day needs—it may surprise them to learn that running water and electricity are not automatic, we get them because we pay for them.

As parents, talking to our kids about how we make everyday financial decisions and using real-life examples will not only help raise them to be more in-touch with money than out-of-touch, but it will also help build in them a firm foundation and confidence about money management that will help them make responsible financial choices as they grow up and navigate life—lessons that cannot be taught in a classroom.

Diana Spatoulas is a senior accountant at Kessler Orlean Silver & Co. PC, in Deerfield, Ill.

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