It's the 21st century, and most of the kids living in the United States are constantly watching their parents put a cute little plastic card into an automated teller machine and seeing the machine instantly spit out a wad of cash. It's like magic! A machine that gives money whenever anybody wants it!

The concept of “the money that comes out of an ATM really comes from a bank account that holds money which was earned by working” is difficult for many young children to understand. Likewise, it's hard to comprehend the notion that swiping a credit card in a machine at the store really means that mommy or daddy will get a bill in a month that must be paid with the money earned by going to work.

Life these days is so electronic that many parents wonder how their children will ever grasp the complexities of how internet banking, automated teller machines, and credit cards work… even in the simplest terms. However, several experts in this field have come up with tips on how to teach children the value of a dollar, how to save money, and how the concept of a credit card works. Learning how to understand these concepts and how to be responsible with money at a young age is knowledge that can help children succeed and prosper for the duration of their entire lives.

Taking a small child who is learning to read and recognize numbers to the grocery store is a great and fun way to teach them about comparison shopping. While in the store, show the child a shelf containing many bands of the same item. Have him or her look at the differences in prices between all of the similar items. Talk about which one should be chosen for purchase, and why it is better… because of price, quality, or quantity included in the package.

While at the grocery store, allow the child to watch the checker scan all of the items, and explain that a computer is keeping track of all the prices associated with each item in the cart. Then, when it is time to pay, allow the child to swipe the credit card for you. This is a good opportunity to tell the child how a credit card works, and that eventually the credit card must be paid with real money.

When a child is given his or her own money to either spend or save, he or she begins to feel a sense of responsibility. Even if the allowance is small - - only a few dollars a week - - it will fill the child with ideas on what he or she wants to purchase with his or her very own money. This is also a good time to explain saving money to a child. For example, if the child is given two dollars, he or she should feel free to spend one of them, but be encouraged to save the other one. Then, the spare dollar can be placed in a bank account and the child can watch and learn about interest earned on money in savings accounts.

Many young children know the concept of, “I want it NOW,” very well. Especially if the item is expensive and the child does not have enough money to pay for it on his or her own. This can be a prime opportunity to teach the child the difference between “wants” and “needs.” It is not a good idea for a parent to step in and pay for an item that falls into the “wants” category just to immediately satisfy the child. Teaching a child to save their money over time for something that is desired is a way to encourage good spending and saving habits.