AMARILLO, Texas (KAMR/KCIT) — Inflation, gas prices, heating and other costs going up. That means families are having to tighten their spending so it’s important to teach kids financial literacy.

Financial literacy is the ability to understand and effectively use financial skills such as personal financial management, budgeting and investing. Teaching your kids these skills is ensuring them they understand the best way to manage their finances; it is the building block for how they behave with money and plan to achieve financial security. It is important to teach financial literacy to kids like other basic skills (hygiene, nutrition, good eating habits, etc.). Teaching kids basic money concepts such as saving for a goal and spending only what you can afford will ultimately help them lead happier lives.

· Kids are never to young to talk about money. You can start when they are very young teach about responsible spending, saving and investing. These conversations should include coins/paper money but also technology (credit cards, apple pay, drafts, venmo, etc.).

· Start small and make the discussion tangible. An allowance is one of the simplest ways to teach kids how to save. You can help them see their earning separated in to save, spend and give. Books can also be a resourceful tool (Planet Zeee and the Money Tree). Also taking your child to the bank with you to understand basic transactions is a good way as well.

· Think creatively. Using games that have financial education imbedded in them is a good way to help kids understand financial concepts (Monopoly, The Game of Life, Day Trading, Paya Day, etc.). This is especially true for tweens and teens.

· Set a good example. Kids learn what they see and experience. Talking financial decisions through with your kids is the best example and, in the moment, teachable events. Tell them the reason for the decision and discuss the value for this decision as well as the negative consequences if the decision was not made. Talk about the mistake you have made with money and things you wished you had known earlier.

· With older kids… especially those going to or in college, talk about the potential problem with credit cards. Explaining how this can rack up debt quick and the amount of interest cards charge is important.

· Parents do not leave your adult kids out in the cold regarding your financial interest. Let them know what accounts you have and where, insurance policies and with who, retirement accounts/ pensions, any real estate/ mineral interest you may have. Knowing these things ahead of a parent’s death is much better than your kids having to scramble around trying to figure it out. Have wills and power of attorney drawn up and in a place your child will know where they are. These documents should not be secret and kids of all ages should know they exist and what they are for.