If grown-ups have trouble spending smart, think about the guidance your kids need. Experts say you can give them a helping hand by...
Talking about trade-offs. Explain to your kids that managing money requires setting priorities. Instead of saying, "We can't afford that," which might scare them, say, "It's not in our budget right now" or "There are more important things we need." When you do splurge on something big, tell them the ways you've cut back in order to afford it.
Introducing them to plastic -- the right way. Open a checking account for your kids when they turn 15 or 16 (bank regulations vary) so they can learn how to use a debit card. "Balancing a checkbook is one of the chores of life," says Dave Ramsey, author of The Total Money Makeover (Thomas Nelson). "Hold them accountable for it every month."
Having them spread the wealth. Help your kids divvy up their earnings by suggesting they spend 40 percent, save 50 percent, and give the rest to charity.
Encouraging an open dialogue. Ironically, parents who are careful to talk to their kids about hard stuff like sex and drugs, never explain the simple concepts of budgeting. One survey found that 79 percent of all college freshman say they've never had a conversation with their parents about managing their money, and 23 percent say it's okay to blow as much as $500 without first checking with Mom and Dad. Start a two-way conversation as soon as your kids start working, making your spending expectations -- and limits -- perfectly clear.
Reminding them what money can and can't do. Today's teens live in a world where shopping is widely considered a harmless recreation, and it's easy for them to think that happiness is something they can buy at the mall. You've got to explain otherwise -- and set a good example yourself. "If you buy a pair of shoes to medicate the stress you're feeling, kids see that -- they're quick learners," says Ramsey. So keep retail therapy -- theirs and yours -- to a minimum.
Copyright © 2008. Used with permission from the February 2008 issue of Family Circle magazine.