Three tips for teaching your kids about money

School will be starting soon for kids around the country. However, one of the most important life lessons kids need to learn won't be taught in the classroom: how to manage their own money.

As a parent, you have the most impact in shaping your child's money habits. How are you doing so far? If you give yourself a failing grade, you're not alone. According to a 2005 survey by A.G. Edwards referenced in Business Week Online earlier this year, more than half of U.S. parents (56%) have not discussed saving or investing with their children.

If you've skipped out on being your kids' personal finance teacher, there's no better time to start class than now. Here are three tips to help shape your curriculum.

Start young
It depends on the child, but kids who haven't even begun kindergarten yet can begin to understand the basic concepts of money. If your child is nagging you for a couple quarters to buy a toy from the grocery store vending machine, he already knows how money works. Instead of pulling the coins from your pocket each time, get your child a piggy bank and encourage him to make deposits regularly. Then have him take a little money out before you head out shopping.

Think EGSS
Teach the four basic components of money: Earning, Giving, Saving, Spending.

As your kids get a little older, give them some age-appropriate chores or responsibilities around the house to earn pocket money for items as small as candy or chewing gum to as big as CD/DVDs. Instead of just putting their money into a basic piggy bank, though, get them in the habit of splitting their earnings into three "accounts"--for spending, saving, and giving.

The spending account is for their everyday "necessities," like the items mentioned above. The saving account is for bigger items that take a little time to build up the money for, like a video game or skateboard.

The giving account can be used for birthday gifts and the like. But also encourage your kids to think "outside the box" with their giving. Point out that they can also give to their church or to a children's ministry, or even to a friend in need.

Practice what you preach
Of course, the biggest way your kids will learn about how to manage their money is from watching your own habits--good or bad. If financial stress is your standard way of life, you can still teach your kids effective money management skills--just start learning the basics and put the skills into practice in your own life as you teach them. There is no age-limit on financial education.