Healthy Financial Habits Start Young

2. Waste not, want not.

Our society takes for granted many of the resources we have at our disposal. Speaking to kids about avoiding waste will instill good habits, including avoiding frivolous spending when they are older. As kids, encourage smart behaviors such as turning off lights and electrical equipment when leaving a room, minimizing water use, not wasting food, and donating their toys and clothes to people in need. These lessons will teach kids to value what they have and the importance of stretching what they own. I am not encouraging frugal living, only to temper excess.

3. Provide an allowance to build an ownership mindset.

Children should receive a small allowance for completing chores or as a reward for going above and beyond. It doesn't have to be a lot of money but giving kids an allowance for completing tasks (above what they should already be doing) trains them to value hard work. Kids generally cherish and save what they earn since they are conscious of their effort to make it. Additionally, saving their money teaches delayed gratification, which is the bridge between hard work and reward.

4. Show them how to budget.

Whether you teach to budget on Excel, Quicken, or have them keep track of their money in a small notebook, kids benefit from understanding that 100% of what they have, doesn't mean they can spend it on themselves. For example, you may require your kids to donate part of their earnings to charity, have savings they can't touch until they are older, or even make them responsible for purchasing gifts for family and friends during holidays and birthdays. These "line items" are useful for explaining the importance of budgeting.

When my children were young, I set them up with debit accounts with the expectation that they would learn to balance and manage their money. I also co-signed on credit cards, so they understood the concept of "credit." These were important lessons to learn before they went to college, where they would be less supervised. These small exercises demystified any reservations they might have about using money responsibly and helped build their confidence around their financial management.

5. Teach them the importance of time.

Train kids to do things early, whether completing assignments ahead of schedule, paying bills to avoid late fees, or paying off debt to save on interest. These habits will help them leverage their most significant asset: time. Apply for internships early, get on people's calendars as soon as you can, and don't save to do tomorrow what you can do today.

Doing things early will go a long way in helping our children plan for their financial future. It can translate into investing in retirement accounts at the onset of their career or working efficiently to save time throughout the workday—reinvesting the time they saved in an office to pursue other interests. Valuing time and staying ahead of the game leads to financial success.

Jim Poolman is executive director of IALC — the Indexed Annuity Leadership Council. From 2001 through 2007, he was the North Dakota insurance commissioner.