Money is big, and it's all around us.
Adults, who have learned from experience about irresistible sales pitches, can find it hard to make good financial decisions. Imagine what it's like for a wide-eyed 8-year-old to confront a dizzying array of choices. We know what can happen in the future if we don't save.
Is it reasonable to expect a first-grader to understand the future consequence of present decisions?
In fact, you can teach kids to understand money, whether they're 3 or 13.
And who better than you to deliver these lessons? After all, the family is the first place most of us learn about money. Over a third of respondents in the Invest in You Savings Survey said their financial role model was a parent. Men had a slight edge as the go-to parent: 19% of participants said it was their dad, and 18% said it was their mom.
Thomas Henske, a certified financial planner with Lenox Advisors, likes this metaphor.
Imagine your kid wants tennis lessons. You drop him off at the courts, but you've neglected to bring one critical thing: a racket. So the fundamental component he needs in order to learn is missing.
The same analogy can be said for money. "Why do we expect kids to know how to handle money when we don't put it in their hands to let them practice?" Henske said.
Most kids don't stumble on money on their own.
"They get to college, and lacking experience with money leads to disastrous results," Henske said.
Kids often don't understand how credit works, so they sign up for a credit card at a school event and use it to pay for a pizza with their pals.
"Unless someone has been armed with some basic financial knowledge, that can turn into a ruinous situation," Henske said.
One of the biggest things you can teach young kids is the difference between needs vs. wants.
Any 7-year-old can see the difference between ordering a $3 soda in a restaurant and drinking water, which costs nothing. "Drinking is a need," Henske said. "Drinking Coke or lemonade is a want."
Patti Valeri, senior wealth strategist at PNC Wealth Management, recommends cluing kids into family discussions about other expenses, such as a car or an upcoming vacation. "Having the conversation sooner than later is important, even if it seems like it's over their heads," she said. Let them hear decision-making around how you spend money.
Some families take living large literally. Wendy Juvenal Mays, 48, a criminal defense attorney, is the mother of six. She recently retired her law practice to spend more time with her family. "I couldn't be the best at both, so now I stay home," Mays said. On the side, she runs a podcast for families about financial independence.
With eight in the family, almost everything needs to be supersized, from meals to vacation plans to the size of their car, which needs to accommodate more people. Food is a challenge, and Mays says that getting meals on the table means stretching the budget creatively.
"We have to really think about consumerism," Mays said. When she was folding laundry, she noticed that all the kids' jeans had holes. Previously, she might have run out to buy more. Now she says she'll mend the holes and they'll all make do with what they have.
A family of eight living on one salary means living on less while still finding ways to live large.
When Mays' husband was asked to chaperone a school trip to Disneyland, he asked if he could purchase additional tickets at a discount so the whole family could go.
When a relative passed away, it meant the family had to drive 14 hours, because flying would have cost $3,500. "Those are the choices we have to make," Mays said.
Working while you juggle responsibilities and manage to pay for day care is a challenge for parents of younger kids. This stage can seem as if it will never end, Valeri said. Care is expensive, and generally people are at an earlier career stage, so they are earning less money.
Even amid a busy life with small kids, Valeri said you need to look after yourself so that you can be there for them. "Make sure you put money away for retirement and take full advantage of anything available," Valeri said.
Take full advantage of the company 401(k) plan if you have access to one. If you're self-employed, use an individual retirement account.
Check out your company's health-care options. Even if there are just a few plans to choose from, understand all the terminology so you grasp how the plan's co-pays, deductibles and co-insurance all work. If you have access and can spare some more money, fund a health savings account to offset future health-care costs.
Nicholas Hartford, 32, didn't want his son to grow up with the same bad money examples he'd gotten from his father, who spent freely but ran into financial difficulties.
A field service engineer in Maryville, Tennessee, Hartford wants Skyler, 10, to understand money basics, from simple banking concepts to cost versus value. Spending can lead to a good outcome or to nothing at all, he said.
Both parents talk about cost and value in terms Skyler can understand. If a toy costs $20 or $30 but is likely to break within a few days, is it worthwhile spending that money?
For about a year the family has been holding regular monthly budget meetings.
Since then, Hartford has watched his son's spending habits change.
"He wants things that have more value," he said.
Some video games run as high as $60, and Skyler will look for ways to save up or earn money for these. He is more interested in cost and value.
Skyler can earn money doing chores, and he is tasked with managing the family's $100 monthly lawn-care budget. When he wants something, his parents will ask him to look around the house to see what he can do — take out trash or do dishes, for instance — to earn the money.
"He will usually negotiate, and he understands that he needs to do something that helps out so he can get something."
Hartford's advice is to be patient.
"They're coming from no knowledge at all on the subject," he said. "We try to use basic terms and oversimplify things."
When it comes to how kids learn to handle money, the weekly allowance is critically important, Henske said — and he doesn't believe in tying it to doing chores or getting good grades.
The allowance is a way to teach kids how money works, how to budget, how to plan their spending. "If you just give a kid money whenever he wants it, how does he learn?" Henske said.
When they are young, Henske recommends a dollar for each year, starting at age 10. They'd get $10. To parental objections that $10 seems like a lot of money, Henske asks parents to consider how much money they spend on their kids every week.
"Show me a parent who's not spending $10 a week on their kid," he said.
Learning about money and behavior are two separate conversations, and there will always be a reason to dock them. Use the allowance as a financial teaching tool and leave the emotions out of it.
Henske likes letting kids choose how to allocate money into three categories: spending, saving and charitable giving. Parents can match dollar-for-dollar or a percentage, depending on what matters most. To encourage kids to save, you could match by an equal amount. The spending jar generally does not receive a match.
"It's such a personal thing," he said. "A family might care more about donating time and volunteering than giving money to charity."
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.