What's the best gift to give a child? Books and games are up there. A good education is vital. A safe and loving home, of course. Here's a supremely valuable gift you may not have thought of: a financial education. Without financial literacy and some money management skills, your children may grow up and quickly find themselves in debt and living beyond their means. They may even end up needing your financial support when you're retired and need those dollars yourself. Image source: Getty Images. Here's how you can get young people off to a great start, financially -- by teaching them vital lessons about money. Each of the following suggestions can be adjusted to best fit your kids' ages and personalities. Start with the basics Start by just talking about money whenever it's relevant during your day-to-day lives. If you're shopping with your children, you might discuss how you're looking for items on sale or comparison-shopping to save money. You can have them watch you pay bills -- and learn how much it costs to have electricity, heat, or a cell phone. If you're in debt and are paying it off, show them how that's going, and share any lessons you've learned, such as how dangerous and regrettable it is to rack up lots of debt on costly credit cards. Teach early money management by giving them an allowance and/or encouraging them to earn some money by doing chores or taking on small jobs, such as babysitting or mowing lawns. One great idea is to have them divide their money into three, spending a third on whatever they want, saving a third, and giving away a third. The magic of compounding As you'll want them to become lifelong investors, be sure to discuss the power of investing, such as in the stock market, where money has grown at an average annual rate of 10% or more over long periods. To help them appreciate how powerfully money can grow via compounding, show them the tables below. This one shows how much a single investment of just $1,000 can grow to, at an average annual rate of 8% (because no one should count on 10%, as it's just a long-term average): Over this period... $1,000 will grow to: 5 years $1,469 10 years $2,159 15 years $3,172 20 years $4,661 25 years $6,848 30 years $10,063 35 years $14,785 40 years $21,724 45 years $31,920 50 years $46,902 55 years $68,914 60 years $101,257 Source: Calculations by author. That should be fairly eye-opening. But the table below may blow their minds: Growing at 8% for $1,000 invested annually $3,000 invested annually $5,000 invested annually 5 years $6,336 $19,008 $31,680 10 years $15,645 $46,936 $78,227 15 years $29,324 $87,973 $146,621 20 years $49,423 $148,269 $247,115 25 years $78,954 $236,863 $394,772 30 years $122,346 $367,038 $611,729 35 years $186,102 $558,306 $930,511 40 years $279,781 $839,343 $1.4 million 45 years $417,426 $1.3 million $2.1 million 50 years $619,672 $1.9 million $3.1 million Source: Calculations by author. The tables show how they can amass hundreds of thousands of dollars, if not millions, just by being diligent and patient. Point out how important time is and how fortunate they are to be very young, because any money they invest will have a long time to grow. Image source: Getty Images. First investing steps Introduce them to the stock market by explaining what stocks are -- actual stakes (though small ones) in actual companies. If you own a few shares of Southwest Airlines (NYSE: LUV), for example, you are a part owner in the company. Help them identify companies that interest them, and make a list. Think about companies whose products or services they use or love. Think about products and services all around them. Here are a bunch of contenders, though your particular kid(s) might have some special interests, with different companies best suited for them: Activision Blizzard (NASDAQ: ATVI) Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) Amazon.com (NASDAQ: AMZN) Apple (NASDAQ: AAPL) Chipotle Mexican Grill (NYSE: CMG) Coca-Cola (NYSE: KO) Costco (NASDAQ: COST) Hasbro (NASDAQ: HAS) Hershey (NYSE: HSY) Lowes (NYSE: LOW) Lululemon (NASDAQ: LULU) Mattel (NASDAQ: MAT) McDonald's (NYSE: MCD) Microsoft (NASDAQ: MSFT) Netflix (NASDAQ: NFLX) Nike (NYSE: NKE) PepsiCo (NASDAQ: PEP) Pfizer (NYSE: PFE) Snap (NYSE: SNAP) Starbucks (NASDAQ: SBUX) Target (NYSE: TGT) Tesla (NASDAQ: TSLA) Ulta Beauty (NASDAQ: ULTA) Visa (NYSE: V) Walmart (NYSE: WMT) Walt Disney (NYSE: DIS) Have your kids pretend to invest in the companies they're interested in. You can set up a portfolio at sites such as Yahoo! Finance, entering various stocks and pretending you bought a certain number at their current price. Then you can check the portfolio's progress every week or so, to see how it's doing. When any stock moves significantly, look up what news there is -- perhaps a strong earnings report has boosted one stock, while a faulty product has caused another to drop. Ideally, your kids will learn that not every stock will be a great investment. You can even get your kids investing for real -- perhaps by setting up a custodial brokerage account. They'll likely lose some money, at least over the short term, so be sure to help them understand that not all investments work out and that patience is required. Also, the more they learn about investing and about how to assess the quality and price of a company and its stock, the better they can do. (The Motley Fool Guide to Investing for Teens might be of interest.) Remind them about those tables up above, and how a growing nest egg can give them financial security for life and can help them reach their goals and dreams. There are few gifts you can give your kids more valuable than the gift of financial know-how. Help your young people start good financial habits early that can pay off for the rest of their lives. 10 stocks we like better than WalmartWhen investing geniuses David and Tom Gardner have an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks Stock Advisor returns as of 2/1/20John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Selena Maranjian owns shares of Activision Blizzard, Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Costco Wholesale, Microsoft, Netflix, Starbucks, and Walt Disney. The Motley Fool owns shares of and recommends Activision Blizzard, Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Chipotle Mexican Grill, Costco Wholesale, Hasbro, Microsoft, Netflix, Nike, Starbucks, Tesla, Ulta Beauty, Visa, and Walt Disney. The Motley Fool recommends Lowes, Lululemon Athletica, and Southwest Airlines and recommends the following options: short April 2021 $110 calls on Starbucks, short March 2023 $130 calls on Apple, long January 2022 $1920 calls on Amazon, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool has a disclosure policy.Source