Birds and Bees or Budget and Bills?

Teaching your kids about the birds and the bees of money is one of the most important talks you’ll ever have, Carmen said. And, like that other talk, it can be just as sensitive.

The money talk is definitely something that gives parents pause, said Janet Bodnar, deputy editor of Kiplinger’s and author of Raising Money-Smart Kids. But now that the days of saying ‘yes’ to their every wants and needs are over, teaching money responsibility at even the earliest of ages is something parents can’t afford not to do.

So how early is too early? When your kids start asking money-related questions – even basic ones – then you know it’s time to start answering, Bodnar said. Remember that children see things simplistically – when they watch you go to the ATM to take out money, they might think that there’s a little printing press in there giving you cash whenever you want it. Teach them that the bank is to you what their piggybank is to them. It’s not always full, and you’ve got to put money in to get money out.

Allowances are still, to this day, one of the best ways to teach kids about money hands-on, Bodnar said. She thinks the time to start giving allowances is when kids are 6-8-years-old. Allowances let them manage their own money and it’s far better than just lecturing to them about how to do it. They want a new video game or DVD? Save up the allowance. At the coffee shop and they want a fancy $5 drink? Maybe you’ll pay for some of it but they have to make up the difference out of their allowance. Let them make their own decisions about how they want to spend their money so they know they have skin in the game. That’s how they will learn to appreciate it, Bodnar said.

Parents still have power and influence over their children, believe it or not. If you set the ground rules and help your little ones learn the ropes about money, they will be thanking you later.