Jennifer Shelton had heard the phrase, "Mommy, I neeeed that," one too many times.

The mother of two said whether it was a lollipop or a new video game, there always seemed to be something her daughters swore they needed.

Teach About Money | Family Savings

So she started making her daughters, ages 4 and 6, buy things on their own, with money they earn around the house.

That's something experts said all parents should do.

David McCurrach, author of "Allowance Magic: Turn Your Kids Into Money Wizards," said parents should start teaching children about the importance of money as soon as they understand the concept and the fact that you can exchange money for goods. He said that usually happens around age 3.

Wants vs. Needs

Teaching youngsters the difference between what they want and what they need is one lesson Diane Mayr said is essential.

Mayr, the author of "The Everything Kids' Money Book," said kids need to know what is a necessity and what is not. She believes parents should pay for a child's needs and only some of their wants. The rest they can save for, she said.

If a child needs a new pair of sneakers, but wants a very expensive pair, Mayr said to offer to save for the difference between a regular pair and the more costly one.

"The parent fulfills the need, the child fulfills the want by jointly paying for the sneakers," she said. "The child may decide on his or her own that the sneakers are just not worth the extra."

Larry Alder, of >SmartPiggyBank.com, agrees that parents should pay for the child's needs in the younger years, leaving an allowance to spend on extras.

Save Or Spend?

The experts agreed that not all of the children's money should be spent on things they want right away. They need to learn to save as well.

Alder said to allow your child to decide how much to save and spend and not to expect them to save it all.

"If you are going to give allowance you should expect the kids to spend it on something," he said.

He also said to let them decide what to save for.

"They have to have an appreciation that they can control their savings," he said.

Mayr said as with anything, practice makes perfect and if a child starts saving early and it is part of what they do on a regular basis, it is easier for them to develop good habits.

As soon as you start giving your child an allowance, Mayr said to start talking about savings. She recommends parents trying a thirds idea. One-third children can be spent, one third for sharing and the final third they can save.

Sharing could be purchasing gifts, donating to a church or charity, or doing other good works.

"It's never too young to instill altruism in a child," she said.

Alder said a good idea is to have them chip in for gifts you buy for parties they attend.

As soon as the child is comfortable with the idea, McCurrach recommends opening a credit union savings account.

"It's probably the only financial institution that will never charge a monthly fee on savings accounts. Most banks start charging once the child reaches 18 and doesn't meet their minimum balance requirements," he said. "Credit unions tend to cater to the small savers, investor and borrower with attractive rates and appropriate programs.

McCurrach said to encourage children to set savings goals and open one account for each goal.

"Children that develop the habit of saving to buy items tend to avoid impulsive purchases and debt accumulation as adults," he said.

Alder said he finds bank accounts to not be the ideal thing for young kids. He recommends parents creating virtual accounts so the children get an idea of money and formal transactions.

But he doesn't think a bank account is necessary until mid-teens when they need to use ATMs.

He said if you don't use a bank, don't forget to give your child interest. But don't skimp or they won't get excited about it, he said.

Money Is Not Taboo

Mayr said it is extremely important for parents to be responsible with their money as well and to be open about costs and savings with their child.

"Rather than complain about doing your income taxes, talk about where your tax money goes and the good it ends up doing for society," she said.

She also said to let children know that money that comes out of an ATM or swiped from a debit card is money was earned by working.

"The trouble with contemporary society is the kids really do think money is free," she said.

McCurrach said to also tell your kids about the dangers of credit cards and how you use them responsibly, if you use them at all. He believes most young adults are better off without credit cards.

Mayr said money should really be talked about.

"Not to scare the child, or make him or her anxious, but to give the child some level of understanding and involvement in family matters," she said. "If money is tight, don't hide it from the kids. Let them get involved in trying to save money by spending less."

She recommends showing children bills and having them sit in on a bill-paying session. She said to talk to them about how many hours you had to work to pay for an item.

Mayr said teaching your children about money all comes down to communication and example.

Overall, Alder said the biggest mistake a parent can make is not letting your child make money mistakes.

"You have to let them spend money on that thing you know they won't use so the learn the lesson," he said. "It is hard on the parent but rather them make a mistake spending $20 on that flashy toy now than thousands on that flashy car when they are adults."

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