The Tipping List

We are raising a generation of young people who are almost completely financially illiterate. Youngsters have no real concept of where money comes from and many college-age children can't even balance a checkbook. While students continually learn and relearn American history, few are educated about its financial systems. With these severe limitations, it is important that parents start early in teaching their children the basics of financial literacy.

Here are some tips for parents for raising money-conscious kids:

1. Learn to say "no." There is no need for you to buy your children everything they want. If you do, they will never learn the value of a dollar. If you need an excuse, tell them that your financial advisor advised against the expenditure. It's hard to argue with an outside advisor.

2. Cash, not credit. According to the 2007 Charles Schwab Teens & Money survey, one teen in three (33%) would prefer buying things with a credit card than cash. This represents a 61 percent increase over last year (18%). In a world that hypes credit cards on TV and makes getting credit sound easy, it is often difficult for parents to teach their children that "cash is king." Teach your children that if they don't have the money for it right now, then they can't really afford it. Teach them the value of paying off the full credit card balance each month so as not to accrue high monthly fees.

3. Make them work for it. If your children get an allowance it shouldn't be just because they exist, it should be for their contribution to the household. Explain the differences between household chores that are routinely expected of them, like clearing the table and making their beds, and services for which they can expect to be paid, such as bathing the dog or helping their sibling with homework.

4. Refrigerator finance. In her book, It's All About the Money, Honey, Ms. Woods advises to let your children know what paid-for chores they have been assigned for that week and what the monetary value is for each one. Then, post the list of chores on the refrigerator and let your child check off each chore as it is accomplished.

5. Cash, please. Pay your children immediately for their work in one dollar bills placed in their "pay envelope." They will value the lesson of actually counting out the dollars they earned.

6. Open a savings account. Try to make savings fun for your children. Each time they deposit either birthday money or allowance, show them their statement and explain how they are accruing monthly interest. By making the process interactive your children will feel like they have more responsibility, which will make savings more fun and appealing.

7. The rule of 3. Once your children are paid, now it is your responsibility to educate them on how to divvy up the proceeds. It is important to teach them the "rule of 3" - first they give 10 percent to charity, then they should save 10 percent in a savings account and what's left over, they spend. It's a powerful life lesson.

8. Enter the stock market. It's never too early to learn about the stock market. What's their favorite company? By virtue of their lifestyle children are already familiar with some of the biggest and most successful companies on Wall Street. How about McDonald's, Apple or Nike? On each birthday, buy your children one share of their favorite stock and check the prices monthly so they will see how their investments are doing.

9. Encourage part-time summer jobs. Taking that first step into the job market can be scary, but with a little parental guidance, it could be the first step towards financial freedom for your children. A part-time job will not only help your children learn the value of money, it prepares them for understanding the real financial world. They will learn that Uncle Sam is their partner and that FICA is more than just a silly acronym.

10. Learn the basics. Since most of our school systems do not teach financial literacy, it is up to us to go elsewhere to learn the basics. The www.themint.org is packed with fun financial literacy activities, games, challenges, quizzes and tests for students and teens, tips for parents, and entertaining programs and lesson plans for teachers. The Internet and library provide great teaching tools; you can find helpful information on financial web sites such as www.finance.yahoo.com and www.money.cnn.com/pf as well as books such as It's All About The $Money, Honey!, available at www.amazon.com

Victoria Woods, President & CEO of ChappelWood Financial Services, advocated a bill that passed in 2007 establishing mandatory financial literacy in Oklahoma schools, and continues focusing her efforts on Congress to promote financial literacy nationwide. More information may be obtained at Ms. Woods' website, The Financial Diva.