Considering how important financial skills are to navigating life, it's quite surprising that they are not taught in schools. Children don’t receive any financial education whatsoever. Many young adults even graduate college without knowing basic concepts about financial education. Saving money, mortgages, interests, and inflation are all foreign concepts for many young adults, and this leads to disastrous effects.

Should children learn about money? Can learning about finance at an early age help children? The obvious answer is yes, and they should learn about it as soon as possible. Even the smallest lesson about the importance of savings can be helpful.

So how should you start teaching your child about money? Let's see what Valentino Ojeda Avila has to say:

#1 – Explain where the money comes from

Children should learn about finance at an early age. Where does the money come from? The link between work and money should be repeatedly explained and demystified. Money doesn't just come from mom or dad's wallet. Parents work for the money, and when they work they get paid, when they don't work, they don't get paid. Children should understand the relationship between work and money as soon as possible.

#2 – Talk about the three main principles of financial education – giving, saving, and spending

As soon as you demonstrated the relationship between work and money, it's time to go through the three main concepts behind good financial education: giving, saving, and spending. Giving is about helping others and compassion. Children should learn about the impact of helping others at a young age. Also, teach your children about the importance of saving money. Encourage them to set aside some of their money for savings, even if it’s a very small amount. Help them create a small savings account. They should spend some money each time they get paid, but should also save a small amount. Remind them that when you spend money, it's gone. Of course, they will make mistakes, but you are there to help them!

#3 – Help your child organize cash

Children need tangible ways to understand abstract concepts, like saving or spending money. Don't just explain these principles – work together with them and present the tangible aspects behind the principles. Give them concrete tools and physical items to practice them.

To do this, get three separate piggy banks for your child. Label one “spend, one “save” and the last one “give”. Every time your child gets an allowance, no matter how small, encourage him or her to split the money between all three banks. The key is to see how your child splits the money and how they choose how much to spend, how much to give, and how much to save. This exercise helps children understand money, what they can do with it, and what types of opportunities it provides. It's a basic money management lesson, and it's very helpful for young children.

#4 – Include the children in the family budget talks

Bringing the children in on family budget talks is a great way to help them learn about finance at an early age. They will see how important money is, what bills are, and why they must be paid. It helps children understand the importance of money, budgeting, and how financial issues are dealt with. Keep in mind that children naturally emulate their parents, so they will start thinking about saving, spending, and giving.

Of course, if the children are too young to attend these financial discussions, you should not bring them in. The final goal is to simply get them comfortable talking about money, how it works, and how should they handle financial issues.

#5 – Are you paying the bills online? Let your kids in on the entire process

Teach your children about budgeting by explaining to them how you actually pay the bills. This will help children understand how money is actually used and how important bills are. It helps children understand the relationship between money and bills, and how money has to be used in order to provide the things we use daily.

#6 – Give cash gifts for birthdays and special events

Birthdays, holidays, and other special events should be the ideal moments to give your kids money as a gift. You can also give them toys or other types of gifts, but money is a great alternative, especially if you want to teach them about savings. What's more, money gifts save you time on shopping and empowers children to actually do the math and understand how money works. It also helps children understand that toys and sweets actually cost money and this money can be used for different purposes.

#7 – Allowances are fine, but make them count

There's a moment when children need some money of their own. The money could be spent on virtually anything, from sports activities, books, transportation, field trips, or for buying gifts for friends. Of course, giving them an allowance is perfectly normal, but create a system where they have to earn it. This helps them understand the relationship between work and money, and how income is created. Pay your children for doing chores outside the normal daily tasks, such as mowing the lawn, taking care of younger siblings, or cleaning their room. Children should contribute to the household like everybody else, and this creates the perfect occasion to pay them for their effort.

Allowances shouldn't be just for the fun stuff. You should teach your children about the power of money and how it can be used to buy useful goods or services. Sure, it can be used for fun, but money is an important tool to help you cover your needs. This lesson is critical for children and should be repeated as often as possible. For instance, encourage children to save money to buy computer games, pay for extracurricular activities, buy clothes or a new computer. In time, they will learn about saving goals and how to meet them.

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