For Parents: Teach Your Children Well

Recent surveys report that in the wake of the financial crisis, parents worry that their children's future will be limited. That's what we're addressing head-on, so that instead of living in a state of anxiety about your kids, you can act to secure their future right here, right now. Raise a child in a home where money is valued, and that child is likely to be an adult who values money. It really is that simple. Here's how to instill that trait:

1. Ask Your Children What They Love
You can begin this conversation when they're as young as 4 or 5. When you ask, do they talk about you, their grandparents, a sibling? Or is their list about possessions? It's natural for us to desire material possessions. But you know my motto: People first, then money, then things. If your child has moved things to the front of the line, you have some work to do. If you're clear that you care most about your family rather than what you own, you're telegraphing an important lesson.

2. Establish the Work-Pay-Purchase Connection
When they're between 3 and 6, your children need to learn why you work, and the purpose money serves. Explain that the groceries in the refrigerator were bought with the money you earned. Once your child is old enough, have him join you on errands and pay the cashier. Physically connecting to money helps us focus on what we spend. That's a lesson children should learn early.

3. Introduce Work-Pay Into Your Family
When they're between 6 and 10, tell your children you'll pay them for doing chores. Set a weekly time when you'll make the payment. Once your children become teenagers, stretch out payments to every two weeks. It's an introduction to budgeting.

4. Take on the Great Utility Challenge
Pull out your utility bills and make your older kids an offer: If they're able to reduce monthly costs by 15 percent, you'll split the savings with them. You'll be amazed by how quickly the lights are turned off in rooms they're leaving, and how everyone is happy to put on a sweater and turn the thermostat down. This challenge teaches your child that it takes money to live.

5. Don't Apologize for Being Financially Responsible
There may be times when you must say no to spending that you previously said yes to. Be compassionate. Be patient. But please don't apologize. There shouldn't be any regret.

Next: For Parents of Teens: Create a Financially Honest College Strategy