Money talks - why don't we?

At one point in his life, my grandfather was a millionaire. I say "at one point," because he spent his money in ways that rid him of that status. Don't worry; he's doing fine. But he isn't close to a millionaire any more. Most of that happened through ignorance.

Grandpa Simon came from a poor family, and his father never taught him about money. In turn, he never talked to my dad about money. At least, not about how it works and how to make it work for you. My dad didn't do much money-talk when I was growing up, either. For something that we spend 40+ hours away from our families to earn each week, it seems weird that we wouldn't discuss it more often. Teaching our kids about money, and teaching them when they are young, will have lasting benefits. You don't need to be an expert. Here are three tips on teaching your little ones about money. These tips may even help you to be better with your own finances as well.

1. Start a piggy bank

We started a piggy bank with our daughter when she turned three. I opted for a large, translucent milk jug with a slit in the lid. That way, she could see how the money piled up. Any time we had some spare change or found a coin on the sidewalk, we let her put it in her bank. This year she graduated to a ceramic bunny because she grasps the concept, but a clear jar or bottle is great for newbies. This will help them get excited, even though they don't fully understand money yet.

2. Talk about costs out loud

If you mention out loud the tiny things you do automatically, your kids will learn to think frugally. Say, "These are the same eggs, but it's cheaper to buy 18 than 12. We'll get 18." Talk through your mental calculations out loud. You're already doing them, so just say it so they can hear it. Now your child understands your thought process in making financial decisions. An added bonus: This may be the most practical math tutoring your child can get from you.

3. Let them set a savings goal

Talk to your children about individual savings goals. Then set and execute those goals. An example would be saving for a new bike, toy or even ballet or sports team fees. By setting a savings goal, putting the money in a bank they can see, and then using the money for that goal, your child will learn three important lessons about money. Firstly, we need to have patience and pay for things with cash. Secondly, using money means using your own time. Lastly, when you buy something, your total money is diminished.

If you talk to your children about money from a young age, they can feel empowered in making money decisions. Let them make mistakes with money while they are young. Saving for six months for a toy they don't play with much can keep them from demanding a $500 gaming system they also won't play with much in the future.