Teaching your children about finances is one the most important things you can do as a parent. Not only does it help them become financially responsible adults, but it also sets them up for success in the future.

In fact, 83 percent of parents say they wish they learned more about finances growing up, according to a study conducted by Chase and OnePoll. But the study also found that 59 percent of parents feel uncomfortable talking about money with their children.

Teaching finances to your kids can be a daunting task, especially if you don’t know where to start. Here are some ways you can approach the subject and some tips for effectively teaching your kids about managing money.

1. Start teaching kids early

The best time to start teaching your children about finances is when they are young.

“Children begin identifying with financial scarcity and or financial abundance at a very young age, even when we never take the time to talk to our children about money,” says Danna Jacobs, CFP, ADPA, MBA, president of Legacy Care Wealth in Morristown, New Jersey.

“Children are observant, and they can see if financial decisions take a toll on your household or if other families are making different money decisions,” she says.

For that reason, it’s important to be open with young children about finances and guide them toward healthy habits. Jacobs suggests starting as young as three to six years old, giving them a small allowance each week that’s equal to a dollar for each year of their age.

That allowance can be divided into simple categories, like spending and saving. As the children get older, they can learn more complex money lessons.

2. Help them learn to budget with money jars

Using money jars is a practical and visual way to teach your children about budgeting. When your child receives their allowance or earns money for completing tasks, they can allocate a portion to each jar based on their priorities.

Jacobs of Legacy Care Wealth says she typically starts with three jars, labeled “goal” for spending, “grow” for saving and “give” for charity.

Essentially, these money jars teach kids a simple lesson in budgeting: They show how you can plan ahead by dividing money into categories.

3. Let them learn from experience

Allow your children to learn from real-life money situations. Rather than giving them orders, let them experience the natural consequences of their actions.

This is something Tara Unverzagt, CFP, CFT-I, founder of South Bay Financial Partners in Torrance, California, found valuable when teaching her own kids about finances. Unverzagt tells about giving her kids bubble gum money — a small allowance each week that they could divide how they wished among spending, saving and giving.

At first, the kids were more likely to spend that money more impulsively, but over time, they learned that they could get bigger and better rewards for saving it and letting it accumulate. That experience taught them the value of saving and planning ahead.

“Letting your kids experience money, money decisions and the consequences of money decisions as a child sets them up for success later in life,” Unverzagt says. “’Fixing’ kids’ money problems delays this learning. … Supporting their decisions and being with them in their painful moments is far more loving and helpful.”

4. Set goals with your kids

Working with your children to set financial goals is an excellent way to teach them about the importance of saving and budgeting. When setting financial goals with your kids, it’s important to make them achievable and measurable.

One goal that’s an easy place to start is saving up for holiday gifts. You can help your kids determine how much they want to spend on gifts and help them track their progress over the course of the year, until they can eventually buy gifts for friends and family.

Some other goals that kids might save for, including a mix of short- and long-term goals, are:

  • Getting a toy or game they want
  • A special event, like a birthday party or field trip
  • Buying a phone
  • College

5. Consider using an app

Technology can be used to your and your kids’ advantage. There’s a good chance your kids are already familiar with using a smart device and apps, so it makes sense to integrate these tools into their financial education.

There are many financial apps designed to help children learn about money management. Apps like FamZoo and Greenlight allow parents to allocate allowances and monitor their kids’ spending.

They also frequently offer unique and engaging ways for children to learn financial lessons. Greenlight, for example, includes a built-in money game called Level Up. Kids complete challenges and answer questions related to important money lessons. As they complete each challenge and learn a new lesson, they earn rewards.

6. Open a youth savings account

A youth or kid’s savings account is designed for stashing away money, as with a standard savings account, but a youth account comes with features geared toward teaching children about saving and banking. It will also give your children a sense of responsibility and ownership over their finances.

These accounts typically come with no minimum balance requirements, no or low fees and a degree of parental control. Parents may be able to limit how much kids can withdraw from the account, for example. Some of the top youth savings accounts also earn interest.

7. Give older kids a debit card (with limits)

As children approach and reach teenage years, it’s important to start teaching them about financial responsibility, and one way to do that is by giving them a debit card with spending limits. Debit cards can be useful for teaching kids about managing money and budgeting, but they should be used with caution.

Some things to keep in mind when giving kids a debit card include:

  • Set spending limits.
  • Discuss how to use the card responsibly and avoid overspending.
  • Teach them to check their balance regularly.
  • Teach them about fees, such as overdraft fees.

8. Don’t overlook online spending

Online spending is prevalent, and your kids will likely have access to many of the same online platforms you do as they get older.

Talk to your kids about the potential dangers of online spending, including identity theft and overspending. It’s important that they know to be cautious when making online purchases and to only shop on reputable websites.

Jacobs of Legacy Care Wealth suggests that teens should be responsible for online purchases like meal deliveries and streaming subscriptions.

“Most children have no awareness as to how quickly Uber Eats meals equal hundreds of dollars of expenses,” she says. “To avoid the shock of them learning the hard way in their 20’s, start now with this exercise so they see the real impact to their accounts for these conveniences.”

9. Maintain open communication

Lastly, it’s crucial to maintain open communication with your children about finances. Encourage them to ask questions and seek advice when needed.

Sharing your own experiences with money, both good and bad, can help your children learn from your mistakes and successes. And as they build their own experiences, let them know that financial mistakes are common. They can grow from their own mistakes and make better financial decisions in the future.

Bottom line

Teaching your kids about finances is a part of parenting that will pay off greatly for both kids and parents in the long run. By starting early and following these tips, you can help your children become financially responsible adults while also avoiding some potential financial concerns on your own part. Remember to be patient and consistent, and be open to discussing finances with your kids, so they feel comfortable sharing their concerns.