Girl laying on floor surrounded by money
Can you indulge your kids and still teach them to be responsible about money?

Whether you've got a toddler or a teen, teaching kids how to spend and save money is one of the most important jobs you'll face as a parent. The lessons you impart now can have a huge impact on how hard your child works, whether or not they get into debt and how well they can budget and plan for the future.

If recent surveys are any indication, kids can use the help. Few kids age 12 to 21 understand even basic financial terms, according to Phoenix Student Fiscal Fitness Survey. Only 12 percent could define the word budget.

But kids certainly know what they want when it comes to money—they want more. Our consumer-driven society teaches them that material things will make them happy. As adults, we know that's not true, and it's our jobs to make sure our kids understand that. Of course, a little overindulgence is perfectly natural, especially among this generation of super-involved parents. If your kid routinely wants the next great toy, video game player or trendy pair of shoes, and then grows tired of whatever it is they just bought within a few days, that's a sign you're erring on the side of spoiling them.

What can you do to help your kids avoid this fate? These two easier-said-than-done rules of parenting can be the keys to success.

First, set clear and consistent limits. When Dan Kindlon, a professor of psychology at Harvard University, surveyed nearly 1,100 parents and 700 teens, he found that kids who had consistent limits set for them on everything from swearing to playing violent video games were less likely to lapse into drug use and depression than teens without such restraints. These boundaries were far more important than the amount of money a family had.

Second, teach your children to make good choices. Along with these basics, you'll want to give your kids a solid grounding in good money management throughout their childhood. You and your Money Group can use this guide to help you do just that.

Start when your child is as young as 2 years old ("Do you want to wear the red T-shirt or the blue one?") and continue throughout their childhood, says parenting expert Elizabeth Crary. Be sure to add more choices as soon as they can handle them (usually age 4). And no matter what, once your kids make a decision, they have to live with it. They'll soon learn that there isn't always one clear, right choice, but that in many cases, there may be a choice that's better than the others.
Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.

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