Tips for teaching children — of any age — financial responsibility

An allowance can be a great first step in showing your kids how to manage money. You may want to adopt a three-pronged approach by setting up three containers — one for spending, one for saving and one for sharing — and putting a portion of their allowance into each. You might give a weekly allowance to the youngest children. Gradually spreading out the timing and upping the amount as they age will help kids learn to manage their spending. If your children spend their entire allowance right away, resist requests for an advance. Talking with them about how to do better next time can help them make smarter choices.

It's only natural for money to burn a hole in the pockets of the youngest kids. But it's important for them to discover the benefits of delayed gratification. If they have their eyes on a toy or a game, suggest they forgo spending their allowance on ice cream or another immediate pleasure and instead save for a few weeks to make the bigger purchase.

You probably expect your kids to clean their room, help with the dishes and do other daily chores. But consider offering them the chance to make extra money by helping you organize the garage, washing the windows or taking on another job that goes beyond the routine. Getting paid for extra work will help instill good habits and give children more control over saving and spending.

Even when your kids are very young, you can speak with them about donating to charity. Ask about causes they care about, such as hungry kids or animal welfare. Then help them direct the portion of their allowance earmarked for sharing to organizations that address those causes. And make it about more than just money. With a child interested in animals, for instance, you could take them to the store to buy things, like animal beds, that a local animal shelter can use (ask first) and then have your child deliver those gifts.

You can work with your kids to create a budget based on the money they receive from an allowance or a part-time job. Encourage them to track their spending and prioritize saving for a small goal, such as a trendy outfit or a popular video game. Once they're 16 or 17, they may be thinking about buying a car or making another type of expensive purchase in the next few years. That takes a lot of effort and planning.

Now is a good time to talk about the growing costs of higher education and put together a plan to pay for college. Have your kids look up tuition costs at a private college and a state school, then talk about how much of the expense you'll be able to cover and whether they'll need to contribute from their savings or earnings. If you've established a college savings plan, explain how it works. Discuss options for government or private loans, and have your teens explore scholarship opportunities. Involving your children in saving for college through open conversations and research can be crucial.

As your kids choose which college to attend, encourage them to be realistic about their income prospects in their chosen career. Make sure the cost of college is in line with the salary they can expect to make when they graduate, particularly if they will be taking out loans to finance their education.

If your daughter is shocked by how much comes out of her first summer job paycheck, sit down with her and explain taxes and Social Security. If your son wants his own bank account, show him how to use the bank's mobile banking app or keep track of an account online.

Your kids may be bombarded by applications for credit cards and car loans during their college years and as they move into the workforce, so have an open discussion about how much debt is too much. Emphasize the importance of paying credit card bills on time and, if possible, in full. Explain that it's crucial to keep loan balances manageable to avoid damage to their credit and point them to resources that can help them build credit.

As your kids consider career options, encourage them to explore internships as a way to gain vital job experience. Remind them that working for no pay now may be worthwhile if it opens the door to full-time employment later. Unpaid internships may also help them confirm their career direction and justify the added cost of graduate school if needed.

Although you may still be supporting your college student on most expenses like groceries and healthcare, talk to them about paying for certain expenses such as clothing and cellphone bills. This will help them learn how to make their money from summer jobs and savings last — and get started on the path toward becoming financially independent. While providing unlimited resources to college-age kids could delay their financial independence, some expenses, such as medical insurance or career counseling, are worthwhile for you to fund, particularly because your children may not earn enough to afford these important expenditures themselves.

At this point in your children's financial lives, your guidance may be seen more as interfering than helpful. But by drawing on your own experiences — both your financial wins and your mistakes — you can point out how long it takes to save a down payment for a first home or how much money they'll realistically need to support themselves if they lost their job. Once the young adults in your life identify their priorities, suggest they work toward setting aside at least 20% of their income toward long-term financial goals. And encourage them to build up an emergency fund that can cover at least six months of living expenses.

Remember how you felt in your 20s when you had a chance to join your company's 401(k) plan? Your kids, too, probably think of retirement as an inconceivably distant event. But you can point out the advantages of starting to save early and increasing contributions as paychecks grow. Remind them that time is one of their biggest assets since compound interest — what you earn on reinvested earnings — can help those savings grow. Encourage your children to contribute at least enough to their employer-sponsored retirement plan to take full advantage of any company match. An employer's contribution is technically free money.

Lessons that are old hat to you likely come as revelations to someone who is just getting started with investing. Matching risk levels to their goals, diversifying their assets and avoiding investments that sound too good to be true are all important steps on the road to a lifetime of insightful investing. Urge your kids to do their research, consider working with an advisor, continue educating themselves and avoid overreacting to how their investments are performing at a given moment.