5 crucial financial lessons for kids of all ages

There may never be a better opportunity than now to teach your kids about money.

Many parents are likely spending more time with their children thanks to closed summer camps and virtual schooling brought on by the coronavirus pandemic. 

"We don't always get a chance in our life to pause and be this present with each other," said Stephanie W. Mackara, president and principal wealth advisor of Charleston Investment Advisors, based in Mt. Pleasant, South Carolina. She's also author of the book, "Money Minded Families."

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"Just like we want to teach them about eating healthy, exercising, and not sitting in front of the TV, we also have to include financial and basic money management skills," she added.

With millions of Americans still unemployed, parents may also be struggling financially and don't know how to address the issue with their kids.

However, talking about financial health is just as important as discussing physical and emotional health, Mackara said. She suggests approaching the discussion head on with your kids, but not going into the "gory details" of your financial problems.

"We don't give kids enough credit," she said. "If we explain to them what we are dealing with, they will jump on board."

Here are five crucial money lessons to teach your children right now.

If you are making cuts to your budget, looking at what is necessary and what is not, explain to your children what you are doing and why. Differentiating between a need and a want will help them build smart spending habits.

Even if your own financial situation hasn't changed due to the pandemic, chances are you know someone who is struggling or cutting back on spending.

Ask your kids if they know anyone cutting back and, if so, what those families are changing, suggests Tom Henske, a certified financial planner with New York-based Lenox Advisors.

"Kids are pretty observant sometimes," he said.

With the changing job landscape for teens, normal jobs may not be available. But there are also opportunities to be entrepreneurial, said Henske, who developed and runs his firm's smart-money kids program

You can even encourage your younger kids to think about how to make some cash.

It can be anything from raking leaves and mowing lawns to child care and tutoring, especially with so many parents trying to juggle work and their younger kids.

"Parents are afraid their kids are not going to get a good solid year in school," Henske said. "They are looking for some supplemental work."

Once they start making money, make sure your kids know to start putting some of that money aside.

They will learn discipline and how to value themselves and their goals, Mackara said.

"Teach your kids that saving equals freedom," she said. "When you save money you have the freedom to do so many different things."

You can also try to be a good role model.

If you spent less money during the pandemic by not going out to dinner, traveling or paying for things like child care, put that money aside and tell your children what you did, suggests Henske.

While this goes hand-in-hand with saving money, it's important to instill in your children the importance of not overspending.

Creating habits early can make it second nature for kids when they are older.

"It is just a habit that you save and you spend less than you earn,"  Mackara said. 

"If they can do that with the first dollar that they earn, they will be set."

Saving money is crucial, but investing is a great way to really grow your money long-term, Mackara said.

Teach your children as young as possible the benefits of compound investing, which is essentially your interest earning interest, she advised.

While Mackara is a proponent of being diversified and investing in index funds over stock picking, she also thinks looking at specific stocks with your kids can really engage them.

Talk about the shoes they wear or the games they play and relate it to the companies that make the products.

Your kids can also simulate stock trading through the SIFMA Foundation's stock market game or go through the paces on the London Stock Exchange's fantasy game.

Even though life may seem hectic and overwhelming right now, it will pay to have these conversations with your kids, Henske said.

"We [may] look back two years from now and realize that we squandered a lot of time on things that we thought were important and they weren't, at the detriment of things that should have been more important."

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