4 fiscal lessons you need to teach your kids
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But poor spending decisions also can be effective financial lessons, says Ameriprise Financial private wealth adviser Renee Hanson. She advocates that parents openly discuss financial woes (in general terms if it's a sensitive subject) and allow their children to make a few poor choices of their own.

"Kids need to make poor purchasing decisions early on to understand how to avoid making big mistakes later," Hanson says. "Parents can also discuss regret. Tell your kids, 'This is the decision I made and this is the cost of that decision,' so that your child can make a different decision in the future."

Hanson believes that allowing children to make a few poor purchasing decisions also helps them understand the value of their money and the things it can buy.

"My daughter bought a pair of Nike shoes for $94, which I thought was outrageous," Hanson says. "The back of the shoes rubbed down pretty quickly and she was furious. She wrote to the company and they replaced them. If I had bought them, she never would have done that."

Keep out of credit quicksand
Want to keep your kids out of debt? Teach them about the cost of credit long before they're old enough to carry plastic, says Hanson.

Credit card debt of high school and college students continues to grow; the average college senior has more than $2,800 in credit card debt, according to Nellie Mae, a student loan company that is a subsidiary of the SLM Corp., popularly known as Sallie Mae. To stem that debt tide, parents need to reach their kids before credit card companies do.

"It is not uncommon for a child who has $10 to choose a $15 item to buy and ask mom and dad for the (extra) money," Hanson says. "But it's important for parents to say 'OK, I will loan it to you and you will pay me back over these amount of months and with this amount of interest.'"

One risk-free way to teach your children about plastic is to hand them a prepaid card when they are as young as age 10. Godfrey says that the card helps kids equate purchases made with plastic to money being subtracted from their account, but without the risk of high-interest debt.

"If you hand them their own credit card, it's like handing them the keys to a car and saying 'Figure it out while you're driving,'" says Godfrey. "I let them have a cash card and a finite amount of money. When it's gone, it's gone."

Godfrey also advocates openly discussing the family's credit status with older children.

"A lot of parents will say 'I've messed up my credit! How can I possibly talk to my kids?' but that's the whole point," Godfrey says. "With our kids we get to do it over."