Child’s play

If you’ve got kids at home, you’re probably wondering how to teach them to be smart with money. You’re not alone. Governments, schools and even corporations seem hell-bent on making sure the next generation knows more about personal finance than their debt-riddled parents.

The sense of urgency stems from the economic meltdown. If there’s one thing we’ve learned (besides bankers aren’t as smart as we thought) it’s that average folk don’t know as much about how the economy works as they should&#8212or how to balance a chequebook for that matter.

As the recession revealed, a nation of financial illiterates is a dangerous thing. That’s why high schools across North America are now loading up on personal finance courses. Some are even mandatory. In Virginia, students must pass a one-credit course in personal finance and economics before they can graduate.

Teens aren’t the only ones being targeted. A new exhibit at Walt Disney World in Florida, called The Great Piggy Bank Adventure, teaches the kindergarten set to save and invest. During the game, an evil wolf tries to devalue their money with his diabolical inflation machine.

I don’t want to come across as skeptical about these efforts, but frankly, I’m skeptical. Recently, I pored over a teacher’s aid that Visa Canada put together on financial literacy. It was pretty dry stuff, filled with the usual quizzes (List five warning signs of financial trouble.) and bland advice about the perils of shopping. (Be realistic about what you can afford.) I’m not against teaching economics and personal finance in school. But I can’t imagine the average 16-year-old responding to this type of stuff.

Really, personal finance 101 is too important to be left to schools. Or Mickey Mouse. It needs to start in the home.

I’m not talking about lecturing your kids about buying $90 jeans, either. Just from watching my own kids I’ve realized that children don’t learn by listening to parents’ speeches; they learn by watching what they do. If you want your kids to be smart with money, the first step is to be smart with it yourself. Clip coupons, go grocery shopping with the sale flyer in hand, wash your car in the driveway instead of a car wash, and brown-bag your lunch. These are little things, granted. But just think back to when you were young. Parents who were frugal didn’t announce it. They led by example.

Another good idea: Put away your debit card and start using cash again. Debit cards give the illusion that money is infinite and not quite real. When your kids see cold hard tens and twenties coming out of your wallet, they’ll get a sense that money is indeed real&#8212and how quickly it disappears.

Got your own ideas how to teach kids about money? I’d love to hear them. You can let me know your best tips by writing in the comment section below. Or e-mail me at [email protected]. I’ll share some of the best ideas we get in a future post on this blog.