BOSTON (CBS) – Telling your 8-year-old she cannot have an iPhone is going to be easy compared to dealing with your college freshman telling you she has maxed out on her credit card or your son asking you to co-sign a loan for a motorcycle.

Being a parent is a tough job! No instruction manual comes with the kid. When my kids were growing up, I had the reputation of being the “worst” mother on our street. You know, the one that always said “no”. I tried to explain that “no” was indeed a complete sentence and I did not have to justify my decision.

Start the money conversations when they are young. Many kindergarteners are exposed to the magic of credit. Many school lunch programs have debit cards. Kids are exposed to these cards that make good things happen. They see you hand the clerk a credit card and you walk out of the store with stuff; Legos, a DVD, groceries.

Give your kids an allowance and do not tie it to chores. Do not threaten that if they don’t clean their room they won’t get their allowance. Threatening never works with a kid. As part of a family, kids should be expected to help with dinner, the yard work, the laundry, etc. If they want to earn more than the allowance, pay them to do chores you farm out like washing the car or mowing the lawn.

Give them some guidance with their allowance. Do the dollars include their lunch money or money for church on Sunday? As the child becomes older, they should be expected to learn to budget their allowance. Formalize it by writing it all down and take this opportunity to explain percentages. 10% for church, 15% for savings, etc. Good math lesson.

This is their money. When they spend it, they should not be thinking of it as your money but theirs. If they think of it as your money, they may believe there is a never-ending supply.

Let them make mistakes with their money when they are 12. Those lessons will serve them well when they are 30.

Whenever you have the opportunity, sneak in a money conversation. We give our kids the sex, drugs and alcohol lectures but we forget about the money conversations. They should understand the money basics long before they start middle school. Talk to your kids about money and include:

Allowances                             Checking accounts
Budgeting                               College costs
Credit cards                            Grad school
Debit cards                              School loans
Savings                                    Family income

One more thing:  The credit card conversation can be short and sweet. It goes like this: When you use your credit card to buy something you are borrowing from the credit card company and you pay interest on that loan. To avoid the interest payment you pay off all of your charges each month. And to get the money to pay off the charges you go to work and get paid for what you do. Keep it simple.

There are calculators online at that can help you figure out how much interest you will pay if you only pay the minimum on a credit card.

  1. Etay says:

    Educating our kids to make smart financial decisions is important to us. is a free service ( website and mobile application) that helps teach kids about money.

    They learn how to save toward goals, how to track their funds and how to make financial decisions. It is also fun, with lots of badges and great visuals.

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