I’ve seen so many people run themselves into debt due to not understanding how money worked in their twenties. Common advice to twenty-somethings is “it’s never too early to learn about money.” The assumption is that our twenties is the first time you have financial responsibilities and therefore is the time to learn about dollars. I say that by that time you may have two decades of bad conditioning about money. You don’t need to have something to have views on it. You don’t need to have something to know how it works. You can teach your littlest ones about money right away. Most parents underestimate the importance of teaching kids the value of a dollar. Any kid can learn the value of a dollar. It will save them a lifetime of learning.

1. First teach them that a dollar can represent many different things. For example $10 can equal ten candy bars, two candy bars, five packs of gum, or the tenth of a video game. This is an important understanding to prevent the thinking that if you have money you need to spend it. 
2. Next show them how saving money over time can turn into a large amount. Older kids may be able to learn about compound interest, but even my four year old understood that a quarter every day become a dollar after four days. Any child that’s old enough to not put coins in his or her mouth, is old enough to receive an allowance. It can be as low as a dollar. Just enough so that they have an opportunity to manage some sort of money.
3. Teach them to compartmentalize. I have my kids separate their allowance money into “Short Term,” “Long Term,” and “Charity.” Short Term is what they can spend on ice cream and candy. Long Term is what they must save for future expenses. Charity is what they separate to give to those less fortunate. Teaching kids that there are less fortunate people out there that need our help will teach kids to cherish what they have and understand the real value of money.