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7 ways to hand down good money habits

Girl holding piggybankBetween tight budgets for working families and high expenses for senior care, not everyone is going to leave an inheritance to their children. However, there is one thing of value you can be sure to hand down: a good set of money skills. The U.S. government's Head Start program says that by age 5, kids have started to observe money in action. That's not too early to start teaching them, and like parenthood in general, that responsibility never really ends.

Here are seven ways to help children get the money skills they need to become financially independent adults.

1. Show them you take bills seriously

Mother and daughter paying billsEven small children will pick up on how you view this responsibility. Discuss with them how paying these bills provides the family with the things they need -- for instance, how your check to the electric company keeps the lights on and the refrigerator cold -- and why it's important to never let these responsibilities lapse.

2. Don't broadcast spousal money disagreements

Parents arguing about moneyYou should avoid arguing in front of your children in general, and unfortunately, money is one of the leading areas of friction in relationships. Try to showcase the ways you and your spouse practice cooperation instead, and leave the more contentious discussions for when the kids are away.

3. Make kids earn some of the things they want

Kids mowing lawnWhile it's fine to treat your kids on occasion, don't get in the habit of reflexively buying whatever they ask for. Having kids set goals for getting what they want and encouraging them to earn toward those goals can help teach the fundamental relationship between work, money and rewards.

4. Exhibit smart buying behavior

Mother and son shopping Show that you plan your purchases in advance and look for bargains, rather than just buying as soon as the fancy strikes you. Witnessing that type of restraint may help them control their own buying impulses down the road.

5. Discuss financial fundamentals with teenagers

Father and daughter balancing a checkbookTeach your high-schoolers how to set up a budget and manage a checking account. Also talk to them about credit and the hazards of accumulating too much debt. Many kids this age are naturally cynical, so play to this by explaining how advertising is often geared toward getting people to buy first and ask questions later.

6. Don't neglect to talk money with young adults

Father and son talk moneyWhen an adult child first moves out, it can be a critical time for their finances. Make sure your children are handling things responsibly and not feeling overwhelmed. They may be reluctant to bring problems up themselves, but raising the topic casually may ease some of their hesitation.

7. Discuss your plans for old age with your adult children

Mother and adult daughterThere are financial decisions to make as you approach old age, from providing for your care to putting a power of attorney in place in case you are no longer able to make decisions someday. Let your kids know your plan so they can help make sure your needs are met and your interests are protected.

Starting on the right path

Whether or not you leave your kids an inheritance, teaching fundamental money skills is a vital part of giving your children a strong financial start. As a bonus for teaching these habits, if you do happen to leave an inheritance, you'll know that gift isn't likely to be squandered.

More from MoneyRates.com on money and children:

Financial wisdom of children

Quiz: Are you a good financial role model?

Money and puberty: Equally difficult topics for parents?

| MoneyRates.com Senior Financial Analyst, CFA

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