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Raising your kids comes with many a talk on life’s big lessons. Some more awkward than others — “the birds and the bees” chat, for example — and some more difficult to explain. Probably one of the more challenging topics you’ll face will be teaching your children about the value of money.

Money is a highly complex subject to teach a youngster about. Even as adults, it’s fair to say most of us are still learning about how to be financially organised, so what on earth should we be telling our kids?

Here are the most important lessons you can pass on.

1. Live within your means

Seems a bit obvious, doesn’t it? However, in a current climate of stagnating wages against a rising cost of living, not to mention an e-payment dominated world where it’s easier than ever to lose track of your spending, living within your means should be drilled in as the foundational step of good money management.

The basic concept of spending only what you earn leads onto to a number of useful conversations: careful budgeting, monitoring spending habits and building savings — so it’s a great starting point to build on with your kids.

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2. The tightrope of credit

Credit cards can be a blessing or a curse, depending on how you use them.

Now, there’s probably not much merit in explaining to a seven-year-old on how credit utilisation affects your credit score, or whether you should employ a debt-snowball or debt-avalanche technique to pay off high interest creditors.

However, you can teach them that the world of credit comes with its dangers that they must do their best to avoid.

It’s not a case of teaching them that anything plastic is bad. More just that buying with credit is not the same as buying with cash, and that the former can end up costing plenty more cash if not dealt with properly.

Essentially, it ties into only spending what you can afford, and paying your dues come the end of the month.

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3. Pay yourself first

The number of young adults in the UK without savings is a stark reminder of the economic climate we’re currently living in. Late last year, it was revealed over half of 22-29-year-olds have no savings to their name whatsoever.

Why is this? Insecure work, high rental costs and poor wages no doubt play a significant part, but in all likelihood an unwillingness to save and poor money management will also contribute.

Teach your kids the value of building savings from their very first pay cheque.

“Pay yourself first” is the phrase most commonly used. What does that mean?

As soon as the money comes in, redirect some funds to your savings, as the money won’t be there to put aside come the end of the month.

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4. It’s only money

Perhaps this is a slight contradiction after teaching your children all the perils of modern economics, but it’s important to never forget that money is, indeed, only money.

Yes, you need to budget carefully. Yes, you must protect yourself via savings. And yes, you should be wary of the world of credit, but money should never define who you are as a person, and it’s essential your children know that.

You’ll no doubt have instilled a strong set of ethics in your children. Money should never get in the way of these. If you can teach your kids that money is important, but values matter more, then you’re on the right track.

Sooner or later, the money chat is one you’ll have to have with your kids. It might not be the most awkward or embarrassing conversation, but it might be one of the toughest to explain.

By focusing on these basics, however, your children should get the fundamental grasp of personal finance they need before they start spending money of their own.

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