smart spending

Talking money with kids

3. Decide what to keep confidential 

Should you show your checkbook and mutual-fund balances to your kids? That's up to parents to decide, say financial experts. It's OK for you to determine how much you want them to know about your money-making abilities.

Heller doesn't talk salary with the kids. "My parents never told me how much they made, and I don't see the need for my kids to know," he says.

However, Leitz chooses to tell her three teenagers nearly everything. "They know my salary, our house's value and mortgage payments. However, they're not to share that with their friends," she says.

Still, she doesn't share her personal-spending or career decisions. "My kids don't need to be making age-inappropriate decisions about whether I earn too little, spend too much or made the right career choices," Leitz said.

"When they decide what they want to do with their lives, I'll explain what my lifestyle is and what I earn to achieve it so they can match their career and lifestyle goals appropriately."

4. Let them have a say 

After you've had the tough talk, ask them what they think and let them express their thoughts. "Listen to them, accept their feelings and empathize," Gallo says. "Then put your heads together and decide how you'll work together to tighten your belts."

Instead of saying, "We can't do that anymore," let kids have opportunities to decide how they can economize, Leitz says. "Don't make it about what they can't have, make it about choices they can have."

You can also offer choices for everyday decisions, based on their age. Say you have to reduce their lunch money. Or, tell younger kids they'll have to bring lunch from home, but make it fun by asking what favorites they want and have them create menus.

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"For teenagers, say you can no longer pay for greasy cheeseburgers, but you'll help them buy what they want to take to school," Leitz says. "Or if they have a job, suggest they use their earnings for any school lunches they want."

5. Explain money doesn't grow on trees 

Whether you feel you've spoiled your kids isn't an issue, but making them understand that money doesn't just appear is. Explaining how money is earned and spent may be too much for kids to digest during the "tough times" sit-down, but it's pervasive enough an issue for a routine discussion.

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