Not so long ago, a friend asked me a question that kept echoing in my mind over and over again. How do we teach our children about money? I keep mulling over this and I am not sure just how to go about it. One thing I do know is that times have changed greatly and are still changing.

Our children are exposed to a capitalistic world in a way we never were. To make a difficult situation even worse, there is a lot of commercialism going on out there. 

Up until they start earning a living, and sometimes well beyond that, kids are bound to spend money like it grows on trees. Long before most children can add or subtract, they become aware of the concept of money. Any four-year-old knows where their parents get money – the handbag, pockets or the ATM, of course.

Understanding that parents must work for their money requires a more mature mind, and even then, the learning process has its flaws. A friend’s four-year-old who has now come to somewhat understand that people need to work to earn money asked, "How was work today?” "Fine,” the father replied. The child then asked, "Did you get the money so we can start saving for my ball?”

This child’s pattern of thought both impressed and challenged me. Often we think that our children may be too young to grasp certain concepts and many times we are wrong. I believe this is why children’s responses and questions tend to catch us off guard.  

At some point, the father of this child had taken the chance to explain that he had to leave for work each morning so he can earn money to buy the family the things they need. The concept stuck in the child’s mind and months later he used the same concept to ‘ trap’ his father into promising him a brand new ball to play with- no excuses. This was not only a lesson in the value of working but also a concept that will help you put the child on the road to handling money responsibly.

By indulging your child in excess you are sending out all the wrong signals. The person you are really indulging is in fact yourself because children are actually not stupid. They quickly learn to work with and adapt to what’s available. Once they learn how money works, children often display an instinctive acceptance of the situation. They are able to wait and postpone the need. When they learn that they can buy things they want with money like sweets and toys, many children will begin defining what they want to use their money for. 

Seeds planted early bear fruit later. It is important to teach your child about money early on, especially since once they are teenagers they are less likely to listen to your advice. Besides, they will be busy trying to avoid the nagging parent and doing other things - like spending money in the name of a social life.