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Kids should start learning money matters young, expert says

Have you started teaching your children about financial literacy? Can they balance an account, do they know how to save money? Have you told them then dangers of debt?

In the United States, student loan debt equals over $1.1 trillion. With a T. And credit card debt is well over the $800 billion mark. With roughly 245 million adults in the country, each adult carries an average of $7500 in debt right now. Is this what we want to pass on to our children?

Teaching our kids about money is no easy task, especially when many adults simply don’t understand it. But there are some simple tips for helping kids learn about money, starting from an early age.

According to Beth Kobliner, author of "Get a Financial Life," kids need to be taught essentials about money from a young age. She said children as young as three can begin to learn about saving versus spending.

“You really can’t start too early,” Kobliner told Forbes magazine.

For young children 5 and younger, Kobliner says learning the art of delayed gratification can be very beneficial. Children need to learn how to save their money for that highly coveted toy. Teaching them that they don’t always get something when they enter a store is also a good lesson for kids.

For this younger age, seeing money in jars is a good model. Three jars labeled “Saving,” “Spending,” and “Sharing,” can help children understand money a little better. Spending money is just that, that gotta-have-it item. Sharing is for donating to a cause your family deems worthy, and saving is put away for a later date.

For kids a little older, up to age ten, teaching them to make wise decisions about money is key, according to Kobliner. They need to learn that money is a limited resource and once it’s spent, it’s gone.

For this age, kids are encouraged to accompany an adult to the grocery store, given a set amount of money, and see what they can purchase. They can learn the difference between more expensive brands and the less expensive, and buying in bulk to lower costs.

Pre- and young teens can understand much more about money and parents can explain things with more detail. Kobliner says to explain, “If you set aside $100 every year starting at age 14, you’d have $23,000 by age 65, but if you start at age 35, you’ll only have $7,000 by age 65.”

They can also go onto the website to see how compound interest works and how much they can save over time. Kids are able to set long term savings goals as well, and save for more major purchases.

“At this age, kids are trying to not save because they want to buy stuff, but thinking of what long-term goals are and what they’re having to give up shows that it’s a good decision,” says Kobliner.

Teens are preparing for big (and expensive) life changes like driving and going to college. Teens need to look at colleges not just based on their location and majors, but also on cost. How much is tuition, housing, extracurricular activities, etc? That should factor into a final decision along with offering what your child is looking for in a undergraduate school. According to Kobliner, all parents should start the college cost talk with their kids by ninth grade.

Families should also check out several different resources about financial aid, student loans, grants, and scholarships. Those will all affect the cost of a higher education.

For those families with young adult children, teaching them how to responsibly use a credit card is vital. Paying off the balance each month is they key to saving potentially thousands in interest fees.

“’s critical that parents teach their kids how to use credit cards responsibly (or better yet—not at all!—unless they can pay the total bill every month),” Kobliner told Forbes.

Money matters don’t have to be scary. And taking the time to teach your children is an investment we all can make wisely.