Financial literacy is one of the most important subjects for a child to learn and carry with them into adulthood, and yet, it is one of the least taught subjects. Kids often learn their money lessons from television, their friends and all of the fractured and unconnected snippets they pick up from their parents. As a parent, you can help your kids start their financial life on the right foot without spending hours every day lecturing them.

Here are five ways to help your children along a fiscally responsible road:

Play the Grocery Game
There are many versions of the "grocery game," and you can even come up with one that is all your own. You can give your children a fixed amount of money and challenge them to purchase as much food as they can with it at the grocery store. For example, you can give them $5 each and a list of food that your local food bank needs. Your kids will have to put their comparative shopping skills to the test to be able to purchase as much food as they can with the limited amount of money. Another way to teach them to shop is to give them your grocery list and have them work out how much everything will cost and identify places where you could save money by buying alternate items.

Let Them Adopt a Budget Line Item
Older children who understand the concept of a family budget can start being responsible for a portion of it. Begin by giving your children a single budget category for a month and let them manage it. Choose an expense type that is discretionary – meaning that you can control how much or how little to spend. Common discretionary budget lines include groceries, entertainment and vacations. Kids can research online to find the best prices and to allocate the budget in the most effective way. Even if they make mistakes during the month, it will have little impact on your overall finances and they will learn a valuable lesson.

Show Them How to Use Budget Tools
There are several great budgeting and expense tracking tools available on the market. One of the most popular and easy to use is Quicken. If you already use a personal finance software program, show your kids how to use it. They can even set up their own budgets on it. They can plan their spending, savings and charitable giving. Learning to track all expenses is a great way to help them get ready for the time when they will be managing their own household budgets.

Set up a Practice Trading Account
Learning how to invest money and how the process works is critical in order to build an effective savings and retirement plan. Kids can learn how the stock market works by setting up a practice trading account and then "buying and selling" stocks. This is a no-risk way for them to learn to read financial news, see how world events affect the stock market, and practice determining how to diversify an investment portfolio. There are many practice trading accounts available online. Choose one that is directed towards children or that is simple to navigate.

Give Them Room to Make Mistakes
Everyone makes money mistakes at one time or another. Allow your kids to make them when they are young and the dollars involved are small. For example, if they absolutely must have the new toy of the season and spend all of their saved allowance on it, they won't have any money for other things for a while. Let them experience that and re-examine whether their spending choice was a sound one. Give them space to make some monetary decisions so that they learn for the next time.

The Bottom Line
Kids are never too young to start learning money lessons. The more opportunities they have to work with money and manage it, the more money savvy they will be as adults.

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