I know, I know. Summer is here and it is time for a break. As if you didn't have enough to think about - your family, your job, vacations, your finances - here's one more item to add to your to-do list: Teach your kids about money.

Why? Because the earlier you start, the sooner your kids will be able to understand important financial concepts that will affect their roles as future employers or employees. Consider this too: If you don't get it together financially, it may be your kids that will take care of you in your old age.

"If you have found yourself giving your kids money after their allowance has been spent, you may be passing on the not-so-subliminal message that being overdrawn doesn't really matter because someone will help them out."

Regardless of where you stand on the whole nature/nurture debate, I ask that you follow along with me. Over the years I have observed my share of human nature and I would like to impart this keen bit of wisdom on all who are willing to take the journey.

For some of you, I have some potentially disturbing news: adults that needed to be bailed out financially by their parents are more likely to be financially irresponsible themselves. Are you shocked? Be afraid - this means that your children, grandchildren, nieces and nephews may learn their money management skills from watching you! So, just between you and I, how are you handling your finances?

To make matters worse, kids don't fall for the old "A penny saved is a penny earned," or a "Debt free life is a peaceful life," they learn from how we actually deal with these issues face to face. It's that old "lead by example" thing. If you have found yourself giving your kids money after their allowance has been spent, you may be passing on the not-so-subliminal message that being overdrawn doesn't really matter because someone will help them out.

What can we as parents and role models do to realistically encourage our children in the development of good money management skills? Here are a few suggestions:

• Stay on top of daily spending. Be consistent with the times and amounts of allowance, how it is earned and how it can be lost. This helps kids prepare for heir own budgeting as they get older.

• Work with them to be sure they understand just what the allowance is for. As they get older, increase their allowance to cover more and more of their personal items like clothing.

• Allow them to make their own buying decisions. They'll learn quickly by making small mistakes with relatively small amounts of money.

• Start a savings account in their name. Open one for yourself, too. Remember, they are watching.

• Learn to say "no" to your kids, and be firm. This is a prized and valuable tool that is not being used much these days.

Finally, seize the opportunity to include children in family financial planning. Explaining to them where your money goes is helpful and can also be used as an explanation as to why they can't have something they are asking for. Of course, leave out all of the gory details. If you discuss how bills need to be paid (you have water, electricity, a car, a home, and even television) you may be surprised at how understanding they can be. Modeling proper budgeting will be something your children will remember as adults. Remember, you learn more by teaching.

By approaching your finances with an open attitude, you can help your children learn to manage their money. The best money lessons are those learned at home.


Michael Finder is vice president of Total Financial Solutions and is a certified estate and college planning specialist. He also co-host a financial radio show on KHTS AM 1220 from 1 p.m. to 2 p.m. every Tuesday and Thursday. Contact him with questions or comments via e-mail at mfinder@tfswealth.com.