Remember when cash was a tangible commodity in all of our personal economies? As kids, we went to the bank, shopped with our parents and frequently watched them pay with cash. Now with cash on the endangered species list, today’s kids see their personal economic situation much differently. As we enjoy the convenience of charge cards, stored value cards, debit cards and ATM cards, the challenge of teaching kids about an invisible commodity like money is magnified. If you’re searching for ways to teach your kids more about what makes up their personal economy, including the importance of saving and how to set and reach their financial goals, here are some practical tips.

Give kids an allowance - If you give your child an allowance, try tying their allowance to responsibilities like feeding pets, taking out trash or cleaning their rooms. Of course, the level of responsibility and the amount of the allowance should be tied to the children’s ages and abilities, and your own financial means.

Help kids build up their personal economy by establishing savings goals - Work with your kids to create a list of why they should save and things they want to save for – big and small – then help them prioritize it. Ask them to put three stars next to the things they want most, two stars next to the things they would like and one star next to those that are least important. Have them categorize the items as most expensive to least expensive. You can help them use these ratings to choose what they want to save for by focusing on the three-star items they want most and determining how much they think they can save.

Help kids find a place to keep their savings - It’s a good idea to keep savings and spending money separate — perhaps in labeled containers. By attaching a picture of that “something special” to their savings container, kids can keep their goal visible. They could use different colored wallets for savings and for spending money or ask if they would like to open a savings account at your bank while keeping spending money at home.

Help kids track their progress. Let’s face it, kids find saving boring (honestly, so do a lot of adults). You can help build and maintain the excitement of reaching a personal economic goal by making a savings thermometer and coloring in the sections as money is saved. Post your child’s progress charts in visible places and celebrate their progress. It’s important to make saving money fun and rewarding with many celebrations along the way.

Encourage kids to avoid spur-of-the-moment spending. While most kids have good intentions for their savings goals, their plans are often derailed by impulse purchases — like that hot new toy. Here is some advice you can give your kids to keep them from getting off-course:

• Leave money behind - Bring only a small amount of money on shopping trips to help avoid impulse purchases.

• Don’t forget about your savings goal - Carry a picture of what you are saving for and compare it to anything you are tempted to buy.

• Be a bargain hunter - Wait for the item you want to go on sale and watch for coupons.

• Don’t rush into purchases - Avoid buying anything you see for at least two weeks. Add it to your “wants” list and then prioritize it against the other things you want.

• Ask for help in securing money - Parents can help keep your savings in a safe place if you think you will be tempted to spend it.

Once your kids establish a saving pattern you’ll find they take great pride in striving for and reaching their financial goals. You might even consider matching their savings after they prove they are serious about putting away an agreed upon amount. As with anything else in life, your children will find determination and patience are rewarded, and the payoff for reaching their personal economic goals is worth the challenge of getting there.

About The Author

Sandra N. Salter specializes in business and personal finance issues and she is also the owner of American Express Financial Advisors Branch Office in New Jersey. She focuses on providing comprehensive financial planning services paying close attention to the long-term financial health of their clients, building customized financial plans that help clients achieve both short-term and long-term goals. The types of services she offers clients include: Income Tax Planning, Saving and Investing for Retirement, Working with Retirees, Financial Strategies for Small Business, Domestic Partner Planning, Risk Protection Planning, Estate Planning, Charitable Giving , Investment Strategies for Education , Asset Allocation and Comprehensive Financial Planning, among other areas. They can be reached at sandra.n.salter@aexp.com.