Children who are taught to understand and deal with their finances from an early age will be saved from frustration and financial problems in the future.

Teaching youngsters about money and financial planning is an engaging and difficult task, part of the difficult role that every parent faces.

The many lessons that parents need to teach children become the building blocks of a solid foundation in their later years. And teaching children about money and personal finances is one of the most important tools parents can provide children for a future of tranquility, stability and independence.

Every child needs to know that saving money is the first rule of financial success. An excellent practice is to teach children that the first thing to do after a a pay check or a gift is to save a portion and invest it.

That means they need to set some of the cash aside for a rainy day before spending any of it. Parents should encourage each child to make regular deposits into a savings account.

Another key lesson is to learn your financial limitations and to create a budget within your means.

Neighbours and friends should not be measuring sticks because appearances are misleading. An apparently wealthy neighbour could be swimming in debt because of excess spending.

Children must be taught that debt eventually takes control of a debtor's life and should be avoided.

Introduce your children to the family budget and teach them where the money comes from and where it goes.

Sitting down with older children and reviewing the family's income and expenses will give them a better grasp of a budget and careful financial planning.

This can be an abstract idea for younger minds if they do not have to understand the realities of the family's budget. Children should learn to create their own budgets and spending plans to encourage proper financial planning practices once they become financially independent.

The next lesson is to teach them to plan for the future. It is never too early to start saving for the financial milestones in life: An education, a house and retirement.

Parents need to take the responsibility to establish efficient investment and saving plans for their young children's future. Once they are old enough to understand, explain the plans and how they are structured.

Talking to children about money and finances might seem like a difficult task, but proper financial foundations and practices established early in life will help them become money-conscious adults. That's the best way to set them on the road to their own financial future.

lBryan Hirsch is chief executive of Pioneer Financial Planning. Visit www.pioneer.co.za or e-mail help@pioneer.co.za for more information.