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Andrew is a first-grader, and it’s great to be a part of his education. We read children’s books together, and his mom and I enjoy guiding him through his homework each night.

Whenever I get a chance, I love to speak with him about topics that aren’t really taught in school, like finances and economics. Kids are so smart today! I find myself constantly amazed by how advanced they are and how much they understand already. 

However, while we teach our children to look both ways before crossing the street, we can easily overlook other principles that are just as basic.

Learning the value of money is something the entire family can benefit from, including our children.

Here are two ways to improve your children’s knowledge in finances:
 

Make financial concepts seem more real
Make financial concepts come to life by showing them different principles.

For example, at your local Kern County Library branch, locate old newspapers and compare today’s prices with prices 25 to 50 years ago.

Children may be surprised to know that because of general price inflation, a child’s fishing pole that would have cost $5 in 1973 would cost $23.35 today. 

Or while you’re at the grocery store, teach your child how to determine the best price per ounce. This is a simple but effective way to show your child the value per unit of something you normally buy, like chicken, fish, beef, tortillas, vegetables or anything else. When you are eating out, teach them how to calculate a tip.

You can also try a new twist on playing house with your children. Give them play money to make payments for the electricity, gas, phone and water as if they are homeowners. Vary the cost of the utilities according to the season and add property taxes and homeowner’s insurance during the appropriate months. Offer the chance to buy privileges with the extra play money left at each month’s end. With the money they’ve “saved” at the end of the month, they can buy the privilege of deciding which movie to rent or choosing family meals for a week.

Set mutual goals
Establish joint goals for your children to strive for, like a special vacation or that video game they’ve been wanting.

Create reasonable amounts for your child to contribute toward the goal.

Your child will feel a sense of accomplishment when the goal is reached, and understand what it takes financially to make such things possible. 

And you may be teaching your child the most important lesson of all:
 

By setting a goal and following through, “I can succeed!”

Teaching your children the basics is important.

So when you’re educating them on the importance of not playing with matches, don’t forget to include the ABCs of finances.

— Martin Reynoso is a financial advisor with The Principal Financial Group.