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Instilling good savings habits and teaching your children about investing can help insure they develop good money management skills. As soon as your children can count coins you can start. Here are some steps you can take to get your children started. Pick your starting point based on what you think will be age appropriate for your child.

Step 1: Savings Accounts

Start with a piggy bank and a small allowance. As soon as your child is old enough to know how to count coins, give them a small allowance, say $1 in coins and have them put 10% in a piggy bank on the day they get that allowance, whether it's weekly or monthly. Teach them early about the value of paying yourself first and saving 10% of your earnings. Check with your bank to see what kinds of accounts they have available for children and the required minimum balance. As soon as your child has enough saved in his or her piggy bank, take them to the bank and open a savings account. Click here to learn about FAIRWINDS kid's S.A.I.L. Accounts.

Step 2: Teach them about how stocks and bonds work.

This can start when the child is eight or nine. You can use the daily newspaper to teach them how to track stocks and begin teaching the basics of how to invest in a company. Explain the difference between a stock and a bond. Help them pick some fun stocks to follow. For example, if they like going to McDonald's then track that stock. Or if Disney movies are their favorite, begin following Disney stock. You get the idea.

Step 3: Use the resources of the Internet.

Your kids love to surf the Net. There are a number of great sites that are fun places for kids to learn about investing. You may also want to start playing one of the fantasy stock games with your child.

Step 4: Advocate for financial management programs at schools.

Is your child learning money skills and investing techniques at school? There are wonderful programs available for teachers to use to develop lesson plans. Free worksheets are available on the Internet that they can print off and use. A nationwide stock game that is being used in grades 4 to 12 is sponsored by the Securities Industry Foundation for Economic Education. Teacher training is available as part of the game. Take a look at this extensive Stock Market Game and see for yourself. Try to encourage your principal to incorporate the program. If you have time or can find a friend that does, volunteer to help get an investment program started.

Step 5: Invest in a mutual fund

As soon as your child has enough saved, consider investing in one of the mutual funds that focuses on children. Mutual funds are an easy way to get started and offer flexibility, diversification and simplicity. Some of the funds that focus on children also provide good educational materials. Stein Roe Young Investors Fund offers an educational packet designed for children when you first purchase the fund and sends quarterly newsletters developed specifically for children.

Step 6: Invest in Stock

Pick a company your child will recognize and enjoy reading about. For example, Walt Disney (DIS) recently won Liberty Financial's coolest annual report contest and PepsiCo (PEP) got the award for coolest cover, which showed the Cat's Eye Nebula from the Hubble telescope. The Stock Learning Center is a good place to find some stock picking ideas for children. It also has some great information to help you teach your children about buying stock.

Step 7: Start an Investment Club

The National Association of Investors Corporation offers a wealth of information about investment clubs. Start here to find out how clubs are being run around the country for children and how to get one started for your children and their friends.

Step 8: Open an IRA

Once your children start earning money from summer jobs or after school employment, encourage them to begin retirement savings. Many mutual funds will let them start an IRA with as little as $250 or $500. Since they don't have to worry too much about current taxes, a Roth IRA is probably their best choice. The contributions may not be tax deductible, but they can withdraw the money tax free at retirement. Think about where your retirement savings would be if you had started that early and taken advantage of all those years of compounded growth.

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