(Photo by Adam Carr)

Young children often have trouble understanding why they can’t have every toy or piece of candy they see at the store. But by about age 10, kids begin to comprehend that money is a limited resource.

The ages of 10 to 12 are an opportune time for parents to begin working on developing financial capability with their kids. The starting point can be discussions about an allowance, chores and financial goals.”

Allowances: Parents often struggle with allowances. But giving your child spending money for small discretionary purchases can be a good way to teach basic budgeting and money management.

For pre-teens, weekly allowances generally range from $1 to $5, depending on what the child is expected to pay for out of his or her own pocket.

Try to always give your child an allowance on the same day. Doing it sporadically makes it hard for kids to know what to expect and how to plan.

Saving for a goal: Adults who successfully manage their money have the ability to set and achieve long-term goals. Children need to begin practicing those skills early to build good habits for adulthood.

Children should discuss and eventually write down their personal financial goals, such as saving up to buy a ‘”bigger” item. Parents can talk with their children about what happens when plans change and how to revise their goals. The process of setting goals and making plans is critical in life so this activity is a great learning opportunity.

Bank accounts: Many banks and credit unions offer very low cost savings accounts (often called custodial accounts) for kids under 18. These accounts are set up in the young person’s name, along with that of their parent. Going to the teller window, obtaining a statement and checking balances online can help kids learn about the benefits of financial institutions and how interest works.

Understanding adult finances: Kids who receive spending money and practice budgeting and saving begin to establish their own sense of financial independence.

Parents can also begin to share more of their personal financial lives with their kids. Revealing how much things cost —f rom groceries to movie tickets to vacations is one example. Another is to share long-term financial goals, such as retiring from work (perhaps using the child’s grandparents as an example). It can also be useful to explain how income taxes work each spring, and even how sales taxes work, using receipts from the store.”

While parents don’t need to offer too much detail, they also should not hide their financial lives from their kids. Children are interested in and can learn from their parents’ experiences.

Gifts and charity. One last area of focus is charitable giving. Some parents offer to match any financial contribution kids make to a charity or toward a gift for someone else. The more kids can be engaged in giving behaviors early in life, the better they can establish patterns of charity for a lifetime.

Overall, it is better to be open about finances, engage in money management with kids, and give them opportunities to learn from their own experiences. A small number of steps can help kids grow up to have financially smart lives.