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How to talk to your kids about money

Talking to your kids about how to handle finance can be an important step in their fiscal development.

Whether it鈥檚 talking about the birds and the bees or explaining the death of a loved one, parents know that difficult conversations are essential for their kids鈥� emotional and intellectual growth. For many parents, talking about money is one of the hard conversations they least want to have with their kids.

According to a 2015 , over a quarter of surveyed parents say it鈥檚 not important to include kids in discussions about family finances; 41% report that they sometimes avoid talking to their kids about money.

But the sooner parents teach children about money, the more effective they鈥檒l be in raising financially successful adults. So how do you start the conversation in a way that will be meaningful, comprehensible and engaging?

Here are some ideas for how to talk to your children about a variety of financial concepts.

Guide them through a budget

Many parents use an allowance as a way to teach children about money. You can take it one step further by helping them for their cash.

Use real-world examples of monthly expenses 鈥� like a soccer uniform, a birthday present for a friend, new school clothes, or favorite snacks 鈥� so your kids can see what a dollar is worth. By including real-life examples, you鈥檒l share with your children what it takes to maintain their lifestyle.

Help set long-term savings goals

Most kids want something new 鈥� shoes, video games or gadgets. Why not have them save enough to make the purchase themselves?

Once you show your children the cost of what they want, introduce the idea of creating and putting into place a long-term savings plan. To track allowance and save toward goals try the app , thought up by an 11-year-old girl聽and developed by her family.

By helping your kids create a savings plan using concrete examples that actually matter to them, you pave the way for them to think about more complex goals, such as saving for college.

Explain borrowing

Children might not even realize that your family has financial obligations to consider, such as for your home. To explain the concept of a loan, provide your children with an example they can relate to, like borrowing money for lunch.

Ask your children to imagine that they loan a friend a few dollars to buy lunch, and the friend pays it back after a little while. The friend throws in a bag of chips as an extra 鈥渢hanks鈥� for the loan. A mortgage is like that 鈥� the bank loans you money to buy the house and requires that extra 鈥渢hanks鈥� in the form of interest. (Interest is a tricky concept, but snacks help.)

And if that friend doesn鈥檛 pay back the loan, your child isn鈥檛 going to want to lend him lunch money in the future. Similarly, banks hesitate to lend money to people who haven鈥檛 paid off loans in the past.

Play money-themed games

An activity that shows, instead of tells, how money works would be helpful for many families, especially for parents who are hesitant to talk to their kids about money. Kids want to have fun, so capitalize on this by using age-appropriate games, apps and toys that teach financial skills.

Try or , games that simulate real life financial strategies and situations in an engaging way. There are also classic options such as play cash registers, Monopoly, or the Game of Life app based on Milton Bradley鈥檚 1860 board game.

Starting early is key

Your child鈥檚 future is the most important investment you鈥檒l ever make, so start the conversation early. The trick is to start small and at home, using everyday examples to teach your children about money. Over time, you鈥檒l be able to explain more complex topics, such as and .

And eventually the investment will pay off: You鈥檒l be more likely to see your children grow into happy, financially confident adults.

is an associate financial planner with in San Francisco.聽Learn more about聽. This article first appeared in .