Reading to kid pinForty-three states now require some sort of basic personal finance education in their K-12 curriculum. So why do American high school students continue to score poorly on financial literacy tests? According to the National Financial Educators Council, students aged 15 to 18 averaged a score of 60% from 2012 through March 2015 on a financial literacy test that covers participants’ ability to earn, save and grow their money.1

It takes time and effort to learn how to be financially savvy, just like other skills. Take riding a bike, for example. Balancing on two wheels, pushing the pedals and steering the handlebars are not mastered in one day. And even when a child can wobble on a two-wheeler without falling over, she still needs to learn to navigate streets, watch for cars and obey traffic rules.

While financial topics are more complex, as a parent, you can apply some of the same intuition and practice to help your children safely navigate the financial landscape to master money skills.

Tailor Lessons by Age

As your children grow up, adjust your financial talks accordingly. When your children are in elementary school, teach them in simple words about the concept of earning an income in exchange for work. Earning an allowance will help them make a connection between the dollar in their piggybank and how they made that money. Introduce the cost of simple items, such as popcorn and a movie.

With teenagers, the lessons get more complicated, but incorporate conversations about money at the same time the life events occur, such as explaining car loans, auto insurance and car repair bills when they pass their driver’s test.

What’s important is to make it a habit to talk about the importance of money and how it will impact their life no matter what age they are.

Share Your Wealth of Knowledge and Experiences

Depending on your own financial experience, discuss investing concepts such as compounding and topics including the pitfalls of credit card debt, the need for retirement planning, and living on a budget. If you find your own knowledge lacking, consider learning together about these topics.

Consider expanding dinner conversations and include your children in discussions about the family’s finances. Strive for transparency. This does not mean you are required to tell them everything, but tailor the conversation appropriately.

Engage Your Children

A walk through a store is an opportunity to engage your children in a discussion about finances. Talk about purchasing brand name versus generic products, buying items on sale, or spending within a budget. These are practical skills your children need to be financially successful in adulthood.

Give your children hands-on experience. Consider opening a savings or an investment account. Let them see firsthand how the accounts grow by earning interest income at a bank or potentially achieving capital appreciation on an equity investment at a mutual fund company.

Whatever you do, the most important thing is to get your children involved, whether through conversations about money, taking an active role in saving and investing, or developing their own budget. Remember that developing financial skills at an early age can pay big dividends later in life.

1 Council for Economic Education and “Survey of the States,” February 2014.