Responsible parents will want to talk to their kids about money. In order to be effective moms and dads should start the conversation early and do it frequently throughout childhood.

Beginning the money dialogue at young age is vital. One study by the University of Cambridge indicates money habits are set by age seven. So, parents should take advantage of strategies to shape kids thinking and attitudes prior to that. Doing it repeatedly is practical and logical. Repetition makes skill and proficiency possible.

For many, discussing money with kids isn’t easy. Here are three tips to get parents started:

Tip 1. Use Slogans to Help Youngsters Build Habits

Companies use slogans to shape thinking and define philosophy all the time. Parents should too. Nike: Just do it!  Allstate: You’re in good hands.  Coca-Cola: It’s the real thing!  Define your financial philosophy. Write it on paper. Develop five or six slogans that express it. Be clear. Be creative. You might have a slogan for saving, investing, smart spending, giving and other personal finance topics you determine appropriate, like credit. Make them familiar to your kids through repetition. (If you would like help getting started, try Sammy Rabbit’s FREE download: Sammy’s Slogans.)

Tip 2. Use Brainteasers to Spark the Interest of Pre-Teens

Almost everyone loves brainteasers. They are great for introducing topics and starting conversation. Here is a classic one in the world of personal finance. It will open eyes and ears of preteens to the astonishing power of compound interest. It may even motivate them to take an active interest in managing their money.

Ask kids, what would they rather have: a million dollars today, or a penny a day doubled for 30 days?

After they answer, show them a penny a day doubled for 30 days is over five million dollars. You can do this with a compound interest calculator online or an excel spreadsheet.

Ask them to make a couple of additional calculations.

  1. Calculate how much investing a dollar a day or thirty dollars a month from age 9 until age 65 would be, assuming a 10 percent annual rate of return.
  2. Repeat the exercise. This time calculate beginning at age 12.
  3. Calculate the difference in the values of the investments. Also calculate the difference in the dollar amounts invested. 

The results will be as follows.

  • Starting at age 9, investing $30 a month for 46 years, earning 10 percent annually results in a total value of $380,440
  • Starting at age 12, investing $30 a month for 43 years, earning 10 percent annually results in a total value of $284,887
  • The difference in the values of the investments: $95,553
  • The difference in the dollar amounts invested by starting three years early: $1,080

This is a simple yet insightful lesson that can lead to many other constructive conversations on time, money, investing, and compound interest.

Tip 3. Use Books and Magazines to Connect With Teens

Pay or incentivize your teens to read about personal finance. Even if they are willing to do it on their own for free, pay them anyway. You want to send your kids a message you think personal finance is an extraordinarily important topic for them to become well versed in.

As teens, your kids may or may not start to tune you out. Either way, help them find other voices to reinforce and grow their money mindsets. There are lots of excellent people from which to choose.

I love Benjamin Franklin. That is one advantage of books. You can gather wisdom from the world’s greatest minds, dead or alive. I have found it never hurts to check in with Warren Buffett. Ginger Applegarth’s book, The Money Diet, is among my favorites. So is David Bach’s The Automatic Millionaire.

If books don’t work for your kids, try magazines and/or blogs. Today, you can find excellent writers on money from every age group.

About the Author

Sam X Renick is the driving force behind the “It’s a Habit” Company and its chief spokesperson Sammy Rabbit, who is dedicated to improving children’s financial literacy. Sam has read and sung off-key with over a quarter million children around the world, encouraging them to get in the habit of saving money.