Teaching your children about money gives them a lifelong legacy. “The more control we have over our money, the less control it will have over you,” says financial expert Sharon Lechter, member of the President’s Advisory Council on Financial Literacy, author and founder of Youthpreneur, an organization that encourages an entrepreneurial spirit in kids. Lechter says it’s important to teach your kids financial literacy because they see you spend money, but they don’t know how to create it, keep it or invest it. “Kids don’t understand the relevance of earning, saving and spending,” she says. Given the influence of the media and peers on kids today, she recommends starting to teach them about money anywhere from age 4 through 6. Consider these tips:

Allowances for over and above.
Don’t hand out allowances for performing the basics of personal and family responsibilities, such as brushing their teeth or doing the dishes, Lechter says. “Give allowances to your kids for showing responsibility over and above their normal responsibility. This could be volunteering to pick up the yard, cleaning out the closet or showing social responsibility such as going through their toys and deciding what to give to Goodwill or a children’s center,” she says.

In addition to allowances, Lechter says it’s easy to build lessons around money into the day-to-day raising of your kids when you consider three more A’s: Awareness, Application and Acceleration.

Awareness abounds.
Put money into your children’s awareness by constantly pointing it out in action. From the daily news to a trip to McDonald’s, learning opportunities about money and its vocabulary are everywhere, Lechter says. Is the owner of the local fast-food place a franchisee? Who supplies them with food and supplies and how do they keep it all so consistent? Or, who invented Velcro or Post-it Notes, and how did the inventor get the idea? To learn about stocks, encourage your child to pick out companies they know like Disney or Apple. Application is doing.
Nothing replaces the experiential lessons of doing, Lechter says. Taking the stock example further, buy shares in a publicly held company as a family and have your kids track the investment. Kids learn firsthand about profit and loss by taking a job, starting their own business or participating in school or group fundraising. “One of our biggest problems is protecting our kids. You want them to learn through experience,” Lechter says, noting confidence, self-esteem and lifelong skills come from success and failure alike. “Celebrate the wins and don’t concentrate on failures.”

Accelerate learning.
Encourage your children to earn what they want, reaching beyond the saving of hard-earned allowance. Lechter says: “He needs $50 athletic shoes but he wants the $150 Nikes. How do we make up the $100 difference for his want? Encourage him to turn it into a goal.” Even by simple things like offering a neighborhood lawn service or by tutoring, kids learn self-sufficiency and innovation when they create their own income opportunities.

For more information and ideas on teaching kids about money, see www.youthpreneur.com.