How to Get Younger Kids Excited About Being Frugal

It is easy for parents to fall into the trap of keeping their kids far away from the financial realities of family life. Rather than teaching them the basics of finance, it's much easier to simply handle it yourself. This gives children the impression that things just "appear" at home and that their parents have an inexhaustible supply of money with which to buy these things (if they think about it at all).

The problem, of course, is that this approach never really teaches your children how to be careful with their money and cognizant of its value. It can lead to some difficult situations later on when older children start to demand name-brand products without understanding why someone would possibly choose a store brand.

Here's the truth: It pays to start teaching your kids the basics of frugality and smart shopping at a young age. Show them how to shop in a cost-effective way and let them see the direct benefits of being smart with money.

Here are five tactics you can start using right now to teach younger children about the value of money.

[See: Basic Money Lessons You (Probably) Missed in High School.]

Show them the benefits. When you're shopping for a common item such as dish soap or laundry detergent, stop and actually look at the options, then talk those options over with your kids. Point out to them that this bottle of dish soap costs $5 while this same-sized bottle over here costs $3. That means that by buying the cheaper bottle, you have $2 left over for other purposes.

Use that same approach over and over again, every time they're shopping with you. Talk over your thought process aloud with them, whether they're fully engaged or not. Make it as clear as possible why you're buying the low-cost item and what that choice is saving you.

[See: How to Talk to Millennials About Money.]

Make it into a game. Encourage your children to complete tasks such as spotting the lowest price among similar items. If they're a bit older, you can have them work out the cheapest price per use -- the least expensive cost per roll of toilet paper, for example.

Make it fun and make sure you tell them that they've done a good job if they actually do find the lowest priced item quickly. Make the action of finding the discounted item seem like a positive accomplishment.

Set a big tangible goal. Frugality often makes the most sense when you take a big picture approach with it. Yes, you might be saving $1 on toilet paper and $2 on dish soap, but what does that really mean?

Put it in the context of a big goal. Explain two or three big things that you're working toward with that savings, and make sure that at least one of them is directly appealing to them. For example, you might mention that the savings from your frugal choices will help pay off your credit cards, but will also help pay for a big trip to Six Flags or to Disney World next summer.

One fun way to do this is to directly tie the savings on a shopping trip to progress toward those goals. Keep rough track of how much you're saving on this grocery store trip with each frugal decision, then total that up at the end. If you saved $40 by being frugal, tell them that $20 is going toward debt repayment, but the other $20 is going toward a Disney World ticket, and that your collective frugal efforts that day have paid for a quarter of a ticket.

[See: 7 Deadly Money Sins to Avoid.]

Pay for purchases in cash. Quite often, the abstraction of paying for a purchase with a credit card obscures the idea that you're actually using money. Your children -- and you -- aren't really connected with the money in any direct way, and that can make it seem like you're not actually spending money.

One way around this is to do your shopping with cash whenever possible. Not only does this reinforce your own connection with the idea that you're paying cash, but it's a visual demonstration of that fact with your children. It makes the purchase seem more real and makes you more mindful of it, which helps to embed the idea of frugality in your mind and theirs.

Involve them in making choices. Frugality doesn't just happen at the store. It happens at home when you're doing ordinary tasks such as planning ahead for meals and doing household chores.

When you're trying to look at things through the lens of spending less money, don't be afraid to think out loud and invite suggestions from your kids. See what ideas they come up with. Not only does this encourage them to think in a frugal way, they often will come up with really good ideas you might not have considered. Plus, it makes them feel involved and empowered if they're helping with activities such as meal planning.

Children love to be involved with the adult world and love to feel useful. Take advantage of those feelings while teaching them about the value of frugality. Good luck.

Trent Hamm is the founder of The Simple Dollar, a website covering practical personal finance issues for everyone. He is the author of two books, "The Simple Dollar: How One Man Wiped Out His Debts and Achieved the Life of His Dreams" and "365 Ways to Live Cheap." He has appeared in many publications including The New York Times, The Washington Post and The Wall Street Journal. He currently lives in Iowa with his wife and three children.