Just as money doesn’t grow on trees, kids don’t grow up to be good money managers on their own. Raising money-smart children starts with parents talking to their young children as soon as a child takes an interest in money and continuing that dialogue through the college years.

After all, the more exposure to money issues children receive when they’re young, the better equipped they’ll be when they’re older and the financial “stakes” are greater. The ages of 5 or 6 are a great time to start their financial education and get them thinking about money. Consider the following strategies that can help illustrate the fundamental principles of saving and spending and lay the groundwork for a lifetime of healthy financial habits for your kids:

Start an allowance and savings. While teaching and encouraging your kids to save is important, saving is a behavior best learned by doing. When your child can count money and shows awareness of how money is used, start a small allowance to introduce them to the concept of saving and spending. Have your child save money in a special piggy bank or wallet, and discuss what amount needs to be saved and what types of purchases can be made with the money earned. Also, stick to a regular schedule— a once-a-week payday may work well.

In addition to saving their allowance, impress upon your child how they should regularly put away part of their gift money and income from jobs.

Remember to count their saved money with them periodically, and discuss how close they’re coming to achieving their savings goals. It’s a good idea to give your child a “raise” as they age, or to reward their growing ability to manage their allowance each year.

Open a savings account. As your child develops more understanding, take them to your bank and open an account. Many banks offer learning activities and incentives designed to help children learn the basics of managing money. Don’t forget to teach your child about the magic of compounding interest. Show them the monthly bank statements and point out how much “free money” has been earned.

Keep in mind that sometimes it’s easier for kids to save when there is something in particular they would like to save for. Help your child decide what that item might be, how much it will cost and the amount they’re comfortable saving toward it.

Capitalize on teachable moments. Look for everyday opportunities to demonstrate how money works and good financial behavior. For example, when you go to the bank or ATM machine, explain how savings and checking accounts work. When shopping, point out how you’re paying for items with a debit card, as opposed to a credit card, because the debit card uses cash you already have in your bank account.

And when you’re at the grocery store and hear the popular childhood anthem, “I want that!” explain how you’re at the store to buy only certain items and that there’s only so much money to go around in the family budget. The fact is, if you spend money on everything you want, you may not have enough to cover what the family really needs. Explaining how you can be happy with what you already have is another important lesson to instill from a young age.

Teach smart shopping. The best way to encourage sound spending habits is to model them. When planning a shopping trip, get your children involved in making a shopping list and sticking to it. This will teach them to avoid falling into the trap of impulse buying.

Use educational resources. For parents, kids and even teachers looking for other tips and ideas on how to instill the importance of being money smart from a young age, the Northwestern Mutual Foundation has created a website to help families teach children about money management. The updated website, www.themint.org, features interactive games for both kids and parents, as well as lesson plans for teachers to help children of all ages learn how to use money wisely, and covers everything from saving and spending to stocks, bonds and more, as well as a new part for parents to see just how they measure up in their finance knowledge.

Just like all important life lessons, teaching children to responsibly manage money—earning, tracking, spending, saving, borrowing and investing—takes time and effort. Take the time today to get your kids off to the right financial foot. It’s an investment you’ll never regret. IBI