You can start teaching your children about money as early as age six. Instead of giving them a weekly allowance, try assigning them different jobs around the house to earn money. When they receive their "wages," you can use that chance to explain the value of putting away money regularly. Show them how to deposit money in the bank and explain how their money will earn interest. As they start to under-stand this concept, consider giving them an incentive to save, such as contributing 50 cents for each dollar they save.

When your children are old enough, you can explain how a business operates and why people buy and sell stocks. You could have your child pick a stock he/she would like to purchase and then buy shares in a custodial account. That way they can learn about how the stock market works and about investing for the long term. Children will take a greater interest when it is their money that is invested, making this a great learning opportunity.

As children start to earn money on investments, you may be concerned about how their earnings will be taxed. Children under the age of 14 who have money invested for them under their Social Security number have what’s called unearned income. In 1998, if the child is under age 14, the first $700 of unearned income is exempt from taxes. The next $700 is subject to a 15 percent tax, and any unearned income above $1,400 is taxed at the parents’ tax rate.

When your children are young, you have the chance to teach them things they will hold on to throughout their lives. Teaching them to understand the basics of investing and importance of saving is something that could pay dividends to you and your kids for the rest of your lives.