It is a sad fact but many people retire only to live in poverty. After working forty odd years and over that time earning hundreds of thousands of dollars many have very little to show for it.

What happened to it all? Well, most of it would have just slipped through your fingers. Why? Well, schools are very good at teaching us many different subjects including maths, but the one thing they do not teach is personal finance and how to make money work for you rather than you working for money.

So where can our children learn about personal finance? Well, it is up to us as parents to teach them. Trouble is many adults are not too good at looking after money either, again because we were not shown how to in our youth. Let us face it in most households money matters are not discussed between parents and children. Now I am not suggesting that we start showing mortgage and bank statements as some parents, especially with pre-teens and teens, may find an admission of their financial status embarrassing.

What we can do is advise our children of the pitfalls and dangers that await them in later life. Draw from your own life experiences and dealings with banks and other financial institutions. The fact that at certain times in our lives things are going to happen that will affect our personal finances. Certain things will be out of our control and not of our own making, but there will be times where a choice has been made that “seemed like a good idea at the time”. We have all been there, done that, only to pay a price at the end.

So, how and when do we start them off? As young as possible, usually by the time a child is about 3 years old they know about pennies and pounds and understand the concept of handing them over in order to purchase goods. Hand over enough pennies and they get the lollipop they want at the sweet shop.

Here are some tips and ideas to help your kids start on the right path to financial prosperity.

* Buy a piggy bank for your younger children. Allow them to choose whatever colour shape or size they wish. Invite them to put their pennies into their piggy bank. Occasionally they may count their pennies and reward themselves if they want.

* Once they have proved themselves adept to handling their pennies, take them to open their own bank accounts. Most major high street banks and building societies have special savings accounts for kids. Depending on their age group, they may be offered some incentives e.g. fun packs, money-off vouchers for CDs, DVDs, computer games, etc.

* Many kids think, “money grows on trees”. Let them know that YOU working brings about this paper and metal stuff called money. Whether or not you work or you have inherited a large fortune, do not encourage laziness in your child. I am sure there are loads of chores around the house, washing the dishes, cleaning the rooms, etc. Give your kids an allowance but let them work for it. They also need to be able to work for free sometimes to learn the value of hard work.

* Many relatives nowadays tend to give money for birthdays and Christmas especially for the over 10s. At this age, their tastes are constantly changing (what a 12 year old and a 60-year-old see, as being “the in thing” is usually very different!) Encourage them to save 10% of their money gifts. If they are older and have a paper round or something similar, again encourage them to save 10 % of their earnings. This may be only a small amount but it is a good habit to get into. If you are reading this now, as a middle-aged parent, imagine how much you would have in the bank today if you had saved 10% of everything you had ever earned. Scary stuff!

* Managing money does not mean hoarding it and locking it away forever. It simply means being careful, spending wisely, and acquiring a regular savings habit. Teach your kids that donating money to worthwhile causes is a noble thing to do. This could be to the local hospice, the homeless, or to a charity of their choice. This would help them become more rounded, more respectful of others regardless of the situation and become more appreciative of their own lives and their own prosperity. They would learn that the money returns to you in more ways than you could imagine.

* Encourage your child to purchase a journal or a diary where they can record their dreams and desires. This allows them to dream big and look forward to their lives ahead-filled with prosperity. There is nothing wrong with accumulating wealth to fulfil these desires. Money is not evil!

* “Filthy lucre” and “Money is the root of all evil” are phrases you will often hear people say. Ignore them. Money actually brings enormous good into the world. Creating wealth helps create jobs for others. Investing in business helps to bring solutions into people’s lives by way of innovative products and services. Acquiring a great fortune allows you to donate more money to charity – or even start your own trust fund. Therefore, as you can see money is neither good nor bad – it is what you do with it that makes the difference.

* One of the oldest wealth-creation maxims is, “It takes money to make money”. Unfortunately, it also takes money to lose money. Teach your kids the value of caution when entering into financial affairs. Remember the golden rule of any high-risk venture. Only invest what you can afford to lose. Moreover, let them know that many self-made millionaires started with literally nothing.

* Debt is one of the greatest social diseases of our time. The price to pay for the “have now, pay later” philosophy is that you certainly will pay later. Unfortunately, some high street banks have contributed to this philosophy. My own bank had posters in the branch stating “why wait, have it now!” Debt imprisons you in a job you do not like, creates stress and anxiety in your life, and erodes your wealth creation program. You will never become rich while you are in debt. Teach your kids the value of delayed gratification. “If in doubt, go without”.

* Your financial health is really the difference between how much you earn and how much you spend. It therefore makes sense not to pay any more money for something than you have to. Teach your children that bargain hunting does not make you a miser just a sensible individual. If you see the same item in two different shops with a Pound20 price tag difference, from whom are you going to make the final purchase?

* Eventually everyone is offered a “sure-fire” method of making a fortune, whether it is the three-card trick, an once-in-a-lifetime investment plan, or some time-limited business opportunity only available to a select few… Always check these “opportunities” with a fine toothed comb. Do not part with any money and remember – if it is too-good-to-be-true it is usually is. Teach your kids that wealth creation is a simple and timeless process based on common sense.

Silly question – If you had learned the above principles when you were 10 years old, and had applied them every day of your life, would you be financially healthier today?
What are you waiting for? Teach your kids the timeless truths of acquiring and keeping wealth. Like most parental advice, they probably will not appreciate it now. In later life, they will be thankful that you did. Knowledge truly is the most precious gift you can give.

If I had a dollar for every time a parent asked me what to tell their kids about money, I’d be a millionaire. There are many different parts of money management you can & should tell your children about. Here I will share with you what I believe are seven core lessons:

1. Money can be exchanged for goods or services.
This is one of the first lessons you should teach your child once they are old enough to understand – usually around the age of 3 years. Next time you go down to the local store to buy one or two items, let your child hand the money to the cashier. By doing so, they will gain a greater appreciation of the concept of being able to exchange money for things you want or need.

2. Be careful with money.
Some people I know, seem to think that any coins with a value under 50 cents are just too small to be bothered using, and so when cleaning out their loose change from around the house will simply throw these smaller coins in the bin. What a waste! Encourage your child to be careful with all denominations of money, and show them how those small coins can add up, by starting a family small coins box. Maybe you could use the money to fund small family outings (a trip to the shop to get ice creams).

3. Money has to be earned.
There are many people in the world these days that don’t seem to have ever learned this lesson. They sit around home and expect handouts so they can live, or turn to a life of crime to fund their existence. Be careful not to give your child money every time he or she asks, without expecting anything in return i.e. completion of household chores.

4. Encourage one-third savings, one-third donations, one-third spending.
The exact proportions in which your child divides their money are up to each individual family to decide, based on their beliefs and the needs of the child. This can quite easily be achieved by providing them with 3 piggy banks or moneyboxes – one for spending, one for saving & one for donating.

5. Avoid borrowing money wherever possible.
It is always much harder to repay money that has been borrowed, than to save your money. Some loans, such as home loans, tend to be unavoidable though. A good rule of thumb is if you don’t have the cash to buy it, you can’t afford it!

6. Money isn’t your best friend so don’t let it control your life.
Quite simply, try not to become so over committed with your finances, that you are forced to work 60 to 70 hours a week to continue the lifestyle. If you do, then you are letting the money control your life. You don’t usually need the fancy car (and car loan) or overseas holiday (and personal loan). All these things are nice, but only if you can easily afford them!

7. Show them how to budget & live within their means
This is one of the most important skills that your child must know, that so many people don’t seem to know how to do. Recent surveys have shown, that many people are spending 10% to 20% above what they earn. They are earning enough money to fund their lifestyle, but they simply aren’t budgeting it, and so are wasting large amounts of money each week.

With these seven lessons under their belt, they will be off to a great start, but there are many more money skills that your child will benefit enormously from learning.