Throughout the Financial Literacy Month of April that is coming to a close, I was preoccupied with thinking of ways to teach my young children to be financially responsible. I do not want them to end up like many people in this economy who lose their jobs and find that they have no savings nor investments. According to one survey, 6 out of 10 workers have less than $25,000 in emergency saving and investments, excluding their home and benefits plan. Many of them have more credit card debt than emergency savings. Also, only 14% of Americans are confident that they have enough money to live comfortably in retirement. These statistics show that many Americans do not manage their finances – a skill that can be developed from childhood.

With the economic reality our kids are facing in the future, it is not enough to just teach them to be smart, excel in academics, sports, music and make lots of money. It is also important for us to guide our children on how to be financially responsible, save, learn the benefits of budgeting, and avoid debt.

Below are some tips on how to encourage your child how to management money wisely and develop beneficial habits such as saving, budgeting, and spending responsibly from money he receives:

• A pre-school child can begin learning how to save when he receives gift money. Transparent piggy banks are great because a kid can see his earnings grow. There are even piggy banks that have separate compartments labeled: spend, save, invest, and donate.

• When a young child wants you to buy a big ticket item such as a bike or a new technology, it is time to show how saving money can make him reach his goal. When he has more than one item in mind to buy, then you can teach him how to prioritize. Setting a clear and obtainable goal shows a kid how saving a portion of his money is relevant to his life.

• A child does not learn smart money habits by simply giving him an allowance. Parents should not only discuss with their child how to budget and save his money, but should also be specific and consistent with rules and guide him through the process.

• It is better to start teaching your child early on how to save and manage money wisely while he is in grade school than wait for him to get to high school. Beneficial financial habits are acquired through frequent repetition over time.

• Study shows that high school kids who have to ask for money when they need it have higher financial literacy than those who get a regular allowance. Therefore, it may be more beneficial to hold onto your child’s spending money until he really needs it. Click here to learn more on the pros and cons of allowances.

• Appreciating the value of money and knowing that money involves an investment in time and energy helps a child understand the need to handle money responsibly. Consider letting your child earn allowance from good grades, test scores, and quizzes. Encourage teenagers to get a summer job or part-time job during the school year.

• A school-aged child can be taught to allocate his money. For example, 30% for spending, 30% for saving big ticket items, 30 % for long-term savings and investments such as college, and 10% for gifts and donations.

• Encourage your child to dedicate a portion of his earnings or allowance to charity. It is a good lesson to learn early in life that money can be a means to do good things for people in need.

• Teach your child how to use a journal to track earnings or allowance, expenses, savings, and donations.

• Gift money received from birthdays and holidays should be treated just as thoughtfully and appropriately as dollars earned from good grades, test scores or summer jobs. It should also be allocated proportionately, unless your child decides he wants a bigger portion of it placed into his long-term savings.

• Each month, take your child to the bank or ATM machine and let him deposit his accumulated savings. This makes the act of saving a regular and concrete experience. Over time, this practice becomes a beneficial habit that can stick with him for a lifetime.

• The long term savings should not be used until it is needed for his college. If it is often compromised, it will not grow to what was projected and it will encourage a bad habit of dipping into savings.

• It is important to talk to your kid regularly to be smart about money and how it works. Inform him of options such as high interest savings placements and other investments. Let your teenager go to the bank and move his long-term savings into a high-savings account once it reaches the minimum amount required. If he is too young, let him tag along with you and explain what you are doing and its advantages.

• Do not to allow a teenager access to a credit card or a debit card that allows him to advance money. With the convenience of plastic money, one can easily go over a budget. If he needs to make an online purchase, let him show you that he has the cash and reimburse you immediately.

• If you decide on letting your teenager handle his spending money, do not bail him out when he runs out of funds. He should learn from consequences of his actions.

• A youth who is allowed to habitually borrows money for things he can do without, as an adult, can easily get him into the habit of using credit cards without being able to pay for it by the end of the month.

• A young adult who is savings-oriented and confident on how to make his savings grow can appreciate advanced courses in financial literacy. These courses can help him understand and formulate diversified investment strategies that can lead him to obtain future economic goals.

Remember, teaching anything worthwhile requires your hard work, discipline, and repetition. If you invest your time to encourage good financial habits in your child, these beneficial habits can stick with him throughout his life. This lays the foundation for his financial success.

Chacha Tumbokon is the founder of RaiseSmartKid.com, a parent’s guide on how to raise a smart, intelligent, and bright child – from baby, toddler, preschooler, and school-age kid to teen.