Admit it. You’re a grown person, happy with all or most aspects of your life, successful, well-adjusted. You consider yourself to be possessed of good, effective communication skills, and you know how to talk comfortably to just about anybody about anything. But you can’t talk to your kids about money. Talking to our kids about money is about as appealing to some parents as having a root canal on a wisdom tooth. But the more we convey concepts of fiscal responsibility to our kids, and the more we instill good financial habits early in their lives, the more likely they’ll be to turn into financially responsible adults. (And you know, it’s never too late to start; we recently had a dad who purchased Kidscash for his 25-year-old daughter to give to her for Father’s Day. Gee, do you think he was trying to tell her something??) And lest you think it’s just your kids, or someone else’s kids who are clueless about money, check out these statistics:

* Between 1990 and 1999, there was a 51% increase in annual bankruptcy filings by adults aged 25 years and younger (National Endowment for Financial Education;http://www.nefe.org).

* The JumpStart Coalition for Personal Financial Literacy conducted a survey in 2002 of high school seniors, to assess their financial knowledge. The average score was 50.2%: a failing grade! (www.jumpstartcoalition.org)

* Between 1990 and 2000, the rate of personal bankruptcy in the US rose by 69%, with more current figures showing recent increases as well.

* The average college student graduates with $3,500 in credit card debt, in addition to outstanding student loans.

* The new trend? College freshmen having to drop out of school because they can’t pay their school tuition or buy books, due to excessive credit card debt.

Parents must take the time to convey some basic elements of financial management at home: our kids are not simply going to intuit these principles on their own. Here are a few tips on teaching your kids about money:


1. Don’t be scared to talk about money with your kids! It’s so much easier than you think it is, and your kids (or grandkids) are hungry for the knowledge. Figure out a way that’s comfortable for you, and start with a topic that’s easy to talk about, like how you spent your allowance when you were a kid.

2. Be honest about your own money mistakes, and figure out a way to let your kids learn from what you did (or didn’t do). Believe me, when I started this process, I was beyond embarrassed to admit to my kids the kinds of mistakes I made in my early twenties: using credit cards, not paying them off, not being aware of what my finances would mean to my future, spending too much money on dumb stuff, and most importantly, not establishing any sort of regular savings plan for myself.

3. Get your kids on some sort of regular habit of money management. Whether it’s a workbook format, like Kidscash, or a computer program, or just a tablet with lines on it, start them on a process that will evolve with them as their income and expenses evolve. It’s really like setting them up as their own accountants, and you can point to the information they’ll have once they’ve done it for a few months, such as spending patterns and savings.

4. Be a good role model. If you’re telling your kids to be prudent and discerning in your money management, are you doing the same? Do you have a system that tracks what you get, spend and save? Do you know how much you spend in different categories in your own life? Let your kids see you doing the same things they’re doing, and paying the same attention to your own finances that you’re asking them to pay to theirs, and you’ll be much more successful with getting them to start those good financial habits.

5. Encourage your kids to save at least a portion of any money they get. Starting this good habit now, while they’re young, will help them all through their lives.

6. Don’t dictate: present options. Remember how it felt for your parents to tell you what to do? Well, nothing’s changed. Present options to your kids when they’re considering making purchases, and…

7. Allow your kids to make their own mistakes. Nothing teaches good money habits like making mistakes that cost you. Better they make a $25.00 mistake now than make a $25,000 mistake later. And don't bail them out: it may seem like a good idea at the time, but it will hinder their ability to become financially responsible adults.

8. Discuss, discuss, discuss. Make it clear to your kids that you‘re always there to talk about money, and not to judge their choices. You may not agree with all their choices, but it’s their money, and if they make careful, considered decisions, respect them.

9. Don’t give your kids credit cards! I will momentarily stand up on my soapbox and say this right out loud: don’t get your kids started on credit cards, or debit cards, or anything that looks like a credit card. No matter what anyone tells you, it’s the biggest mistake you can make, and one that will affect your children for the rest of their lives.

10. Be honest, be accurate, be kind. Make sure you discuss money, not harass or nag or wheedle. As your kids get older, you can start introducing concepts of investing and interest, and use today’s financial news as a lesson for what’s really happening in the world of money. But get your facts straight, be honest when your kids ask you questions, and above all, be kind in your approach. It will help to keep that door always ajar.

Helping your kids develop a basic understanding of their finances is the best gift you can give them, and one that will help them throughout their whole lives.

Maureen Dolen Rosen is a writer at Modern Sage --- an online health journal to learn about living a healthy lifestyle, alternative medicine visit http://www.modernsage.com
Maureen Dolen Rosen is a Washington, DC native and mother of two, She published KIDSCA$H in 2001, after searching fruitlessly for a tool to teach her own children how to manage their money.