Whether they realize it or not, parents are always teaching their kids about money management. Kids at a certain age will begin to notice whether you plan out your shopping, put money into savings or spend carelessly. For this reason, the best thing you can do to help your kids develop good money management skills is to set a good example.

Here are 10 money management skills you should teach your kids:

1. Begin with real money

For smaller kids, using real dollars and coins is a great way to start teaching them about money. They can put coins in their piggy bank or use envelopes to keep paper money in.  When they reach 4th grade,  you can introduce the idea of a savings account and its importance.  They can start setting aside any allowance or gift money in a bank account.  By doing this, they will begin to foster a habit of putting money aside for later.

2. How to divide their allowance

When it comes to allowances, it is important to emphasize putting money aside for both sharing and saving along with spending. With kids that are older, they can open their own bank account and put their savings in there.

3. Teach them how to compare prices

By the time kids are in elementary school, they can understand what comparison shopping is.   Allow them to see you going through the sales flyers and make a shopping list.  At the grocery store, go through the list with them and show them how you go about comparing brands in order to stretch your money.  If you give your child an allowance, show them how to check for prices on store websites so that they know they are getting the best price for their money.

4. Show them ways to earn extra money

By the time kids hit middle school, they can start to get creative with ways to make some extra money.  Whether it is doing work in the yard, cleaning cars, babysitting or dog walking, encourage your kids to get out there.  They will thank you for it and it will give them a nice boost of confidence to start earning a little money.

5. Teach children about charity

Teaching kids about charity is another great lesson.  Take some time to discuss what causes or things they have strong feelings about and show them ways in which they can give back. If your child is an animal lover, perhaps he/she can try and raise some money for the local animal shelter.  Whether it is time or money, it is important to impart to children the importance of giving back to their community.

6. Help them learn about credit

kindergarten age kids are not quite ready to understand the details surrounding credit but your child in middle school is.  When they come to you wanting to purchase something expensive, give them the opportunity to save up the money for it.  You can also offer to loan them the money and they can repay you with interest by a certain date.  If they fail to do so,  explain that the consequence will be a penalty fee.  By the time kids are in high school, they can understand the details of credit. There are websites that offer credit report cards which help teenagers with understanding how important credit is.

7. How to Make Change

Cash registers, calculators and just the fact that we use cash much less today, leads to many people not knowing how to make change. Not having this ability really is a sign of innumeracy. Once your child knows the different coins and bills and can count them in multiples, they can easily learn to make change for someone.  The simplest technique to teach is counting forward from the amount spent to the amount tendered. For example, if an item cost 67¢ and the amount tendered is 75¢, then count forward with coins from the 67¢ cost, as follows: 68, 69, 70 (with a penny each), and 75 (with a nickel). In other words, the change should be 7¢ (three pennies and one nickel).

8. How to Balance a Checkbook

Although everything can be accessed online these days, teaching kids how to balance a checkbook is still important.  Without knowing what has cleared your account, you have no way of knowing how much is really in your account for spending.  Not to mention those overdraft fees.

Once your child is in 3rd grade and they are learning multi-digit addition and subtraction, they can start helping you with keeping record of both your deposits and purchases.  When they get a little older, you can start showing them what bank statements look like and how they get used in balancing your checkbook.

9. The difference between wants and needs

Teaching kids the difference between wants and needs is an important concept for them to understand.  Needs are things that we must have in order to survive.  Whereas Wants, are things that are not necessary for survival.  Then there are needs and wants that don’t cost any money, like the air we breathe.  Many needs and wants, though, do cost money and children need to learn how to spend money wisely.

Begin the conversation with your child by asking them what would happen if your whole paycheck was spent on toys, with no money left to buy food or pay for other bills. Help them understand that although they may want toys, you have to pay for needs like food and shelter, before you can pay for things that are wants.

10. How to pay bills

When it comes to paying bills, most people aren’t faced with it until they are on their own and have to pay bills for the first time. The basics of bill paying really comes down to organization.  Knowing what bills you have and when they are due in order to avoid any fees.  The other detail that needs to be kept track of is the bank account and making sure there is enough to cover any bills.

The best way to teach your kids how to pay bills, is to have them help you. Show them how you organize your bills and schedule your payments.  Also have them help you with the math of figuring out how much money is left after the bills have been paid.  This can also be a great segue into discussing the differences between wants and needs.

When it comes to parents teaching your kids valuable life skills, good money management is definitely one of the most valuable.  The best time to start is when they are young.  Children learn by example, so make sure you are showing them good money management yourself.  Adjust your lessons according to their age and maturity level and hopefully they will have a solid foundation for when they are ready to go out on their own.