"I want it."

As much as I love my daughter, I was getting tired of hearing that cloying phrase each time we stepped into a place of commerce. Grocery store. Pharmacy. Flower shop. To this 4-year-old, the location was irrelevant when coupled with an amazing knack for happening upon something she "really, really wanted." Never mind the cost, both literally and figuratively.

For the sake of my sanity and our moderate financial resources, this had to stop. But is this too early an age for a child to understand the concept of money?

I was heartened to learn this wasn't just a necessary aspect of child rearing, but a timely one at that. In actuality, I'm behind the curve. According to a July 2013 study by the University of Cambridge, most children's financial habits have been formed by age 7.

"The habits of mind, which influence the ways children approach complex problems and decisions, including financial ones, are largely determined in the first years of life," psychologist David Whitebread, co-author of the English study, says in various articles.

This reinforces what many financial experts have long believed: Waiting until middle school or high school to introduce sound money habits is too late.

With habits including the ability to plan ahead and to delay gratification formed early in childhood, "it's very hard to reverse those habits later in life," said Guy Stone, research director for the British government's Money Advice Service, which published the Cambridge report.

(More from Manilla.com: 3 Ways You Can Start Teaching Your Kids About Money)

Parent power
The important thing to realize is the immense power, and, by extension, crucial role, we as parents have in helping form such habits. It's a role best served by hands-on experiences more than data dumps.

Some helpful strategies:

  • Don't just bring your children along on trips to the grocery store; let them help draw up the shopping list. This way they get to be involved in the decision-making process and learn how lists help people prioritize needs versus wants. Using a list for "shopping systematically" rather than "just grabbing things off the shelf" teaches children the importance of planning ahead, Nancy Baynes, spokeswoman for Florida-based financial consultancy group Money Advice Center told MSN Money.
  • Similarly, children tag-alongs on visits to the bank when making a deposit or withdrawal (if you still do that sort of thing) lay the groundwork for understanding the existence of money and its role in everyday purchases.
  • Young children love participating in adult-like behavior, so introduce the habit of saving to kids when they're small. The idea of requiring a portion of every dollar received be set aside instills a habit that will hopefully be carried into adulthood.

(More from Manilla.com: Freshmen and Credit Cards: Teach Your Kids to Swipe Responsibly)

  • Don't be ashamed to pay your child for taking on household chores as this helps reinforce the concept of trading time and effort for money. Also, don't be afraid to talk about real-life jobs, associated salaries, and your own (limited or not) means. Your child needs to learn the "why" in why you can't afford to buy everything and why income determines what you can afford.
  • To illustrate the idea of money as a limited resource within a transaction, give your child a small amount of money the next time you visit a store. Explain that the money may be used to make his or her own purchase. Don't give in if they ask for more, but do discuss when they question the limitations.
  • Delayed gratification is a difficult concept for young children to grasp. Let's face it -- judging from the recent mortgage crisis et al., it's not fully understood by a lot of adults. Demonstrate how this works by setting a goal with your child, such as a toy that can be purchased through money the child saves up. You can help engage your child with a chart that illustrates progress toward the goal. Don't make the goal so pricey that it takes months to achieve. You want this to be fun and manageable, not a source of frustration.

Remember, all your child's money habits come down to your actions as a parent. No pressure, really. As you reinforce those habits, just keep in mind a child learns from observation, instruction, and practice.

Jim Staats is a technical support analyst at Manilla.com, the leading, free and secure service that helps consumers simplify and organize all of their bills and household accounts in one place online or via the four-star-plus customer-rated mobile apps. He has a bachelor's degree in industrial technology from California Polytechnic State University at San Luis Obispo. Wedged between stints supporting products at firms including Intuit and Sybase, Jim worked as a journalist reporting on real estate, business, technology, and other issues for print and online publications.

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