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When you think about major childhood milestones, achieving financial literacy probably doesn’t make the list. Yet an understanding of basic money management is one of the most crucial life skills we can offer our kids. These three money lessons are a great place to start.

Make Smart Spending Decisions Let’s face it: Kids are all about instant gratification, which is why it’s a challenge to teach your teen the foolishness of jumping at the chance to purchase the latest (and sometimes fleeting) trends. The fix? Talk about spending habits early. For kids age 9 and up, try giving them the funds you usually spend on discretionary items like games and entertainment, and task the kids with making those purchase decisions. Over time, they’ll learn—often by making a mistake or two—to spend wisely and manage a budget.

Tip
Your Allstate Personal Financial Representative can help your family members plan for their financial future.

Use Credit Responsibly Young people are being exposed to credit cards—and credit card debt—at an earlier age than ever before. A whopping 39% of students already have a credit card when they go to college, and 19% of college seniors graduate with a balance greater than $7,000, according to a study by College Parents of America.

To save your child from that unhappy scenario, discuss how credit cards work before he or she gets any plastic. Be sure to emphasize the importance of paying balances in full and on time, and of seeking out low-interest cards. College-age children should also learn about how spending habits will affect their credit score and how that score, in turn, will work for or against them when they’re ready to buy or lease a car or apartment.

Learn More

Kids are all about devices, but mobile transactions can be risky. Read more on The Dangers of Digital Cash, and talk to your kids about keeping their information safe.

Stash Away Savings The earlier you teach children the importance of saving, the better. Encouraging—or requiring—young children to put a portion of any allowance, gifted funds or money earned into a savings account helps foster a savings mind-set. You can go a little deeper and introduce them to the concept of compound interest with online calculators that show how even small, but steady, savings contributions can grow over time.

When your grown children are ready to enter the workforce, discuss how steering some of their pay toward savings now will make a huge difference in how much they accumulate later.