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This is a sponsored post on behalf of BusyKid.com. As always, opinions remain 100% my own. Read on to learn how these basic money lessons are the perfect introduction to finance for kids at any age, and how the BusyKid app can help you successfully implement them all!

Birthdays. Christmas. Back to School. Weekly errands. All of these have one thing in common. They are moments when your kids ask for things that cost money. That also makes them all the perfect opportunity to make an introduction to finance for kids… no matter their age. If your kids are old enough to ask you to buy something for them and can count, they are old enough to learn these simple money lessons.

Intro to Finance for Kids

Before you can teach your kids, there needs to be a basic understanding of finance. Many may hear the word ‘finance’ and think it is just for large corporations, but the same financial principals they use to operate successfully can be used by you and your family to establish financial security and long-term success. Money is simply currency – what we exchange (or pay) for goods and services. Finance is managing your money and planning for the future.

These 4 simple money lessons will provide an introduction to finance for kids that will truly be invaluable. And all of these can be easily understood by preschoolers, with increasing levels of complexity as your kids mature.

Goods and Services Cost Money

The first basic concept your kids need to understand financially is that all goods and services cost money. When you are shopping with your kids, point out the price tags. Let them be part of the transaction at the checkout. Even if you are using a credit card (which to them may just seem like a piece of plastic), explain that the card is connected to your bank account or show them the credit card bill that you pay every month.

When my oldest was 4, she was pouring over the Christmas toy catalogue plotting out her wishlist for Santa. She was desperate for a Frozen power wheels car – a $400 toy. Instead of telling her “Just ask Santa,” or talking her out of it, I explained to her that $400 was a lot of money for just one gift, for just one child. She settled on a different wish list item with a $20 price tag, that she still plays with 2 years later. And more importantly, the lesson of the value of money has been ingrained in her ever since!

Money is Earned

Some families are hesitant to give allowances because they don’t want to pay their kids for doing chores around the house that they should be doing as contributing members of the family anyway. However, establishing an allowance for your children at an early age removes a valuable opportunity to teach one of the most important lessons in finance for kids – money is earned.

Your kids may see you and your husband go to work everyday, but the tangible experience of earning their own money in exchange for work is irreplaceable. Not only will it help establish a work ethic in your child, it will also provide their first introduction to financial planning and…

The Power of Saving

Once your kids understance that all goods cost money and money is earned, they will quickly start to look at toys, clothes and shoes in an entirely new light. Suddenly, that must have LEGO set with the $100 price tag equals months of allowance, and maybe isn’t at the top of their wish list anymore. Or conversely, maybe it is – maybe they save for months to buy it. You will see them take care of that toy, purchased with the hard earned money they saved, like nothing else they have ever owned.

You will also quickly get a sense for your child’s ‘financial personality’ – are they impulsive? Taking every dollar as they earn it and blowing it immediately? Or do they carefully plan out how and when they want to spend their money? Ideally, you want to guide your kids to the latter.

Once they are earning their own money, set them up with a means for saving it – it can be as simple as a piggy bank or you can set them up with a savings account with BusyKid. As they get older, you can even teach them the concept of compounding to motivate even more savings.

The Value of Investment

What’s the difference between savings and investment? Saving your money is a no to low risk option – if your kids put money away in their piggy bank, it adds up overtime, will always be there, but doesn’t put the money to work earning more money like investing can.

As your kids start saving and making longer term financial plans (beyond the next 3-6 months), they are ready to learn about investing. While a savings account may earn you 0.5-1.0% interest in a year, on average over the long-run, the average real return from investing in the S&P 500 is 7%… but there is risk of losing money as well.

Introduce Finance for Kids with BusyKid

BusyKid is an amazing tool parents can use to introduce finance for kids – and it teaches every single one of these basic money lessons. You can set up each of your children with a profile, outline their daily and weekly tasks, set their allowance and pay them all through BusyKid.

BusyKid will track the money they earn, and you can even get them a prepaid spending card, connected to the money they earn on BusyKid. And best of all, BusyKid is the only system that allows kids to invest their earnings in real stock. Start your free 30-day BusyKid trial today, and start your kids on invaluable life lessons in finance for kids!

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How do you teach your kids about money and basic finance? At what age did you start? For more ideas and to be part of our daily family finance conversations, join our Facebook group: Family Finance for Savvy Mamas.

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