smart spending

Talking money with kids

Leitz used one opportunity -- when her daughter finished a chore and wanted the money immediately -- to explain that because she didn't get a paycheck till Friday, neither would her daughter. Leitz admits she has spoiled her kids, with each having an iPod, but she has been candid about what each purchase costs.

"Now, given what's going on, I say, 'I'm not going to make a big purchase like that, and here's why,'" Leitz explains.

With a cell-phone plan, she explains how much of a child's pay from working a part-time job or doing chores would match up against the monthly fees. "When they realize their phone costs six hours of allowance, it puts it into perspective," Leitz says.

6. Ask them to help out 

Now is the time to ask your kids to help reduce their expenses and save more of their money. Psychotherapist Gallo recommends asking kids for their money-saving ideas. "They often come up with good cost-cutters, like washing the car or doing the gardening themselves," she says.

Also consider having a regular "family money night.” Pick a regular time slot for a sit-down to discuss all financial issues from planning holiday gift-giving to what credit-card charges to make. All these decisions involve the kids. So increasing their awareness level will make them better understand why you keep saying, "We can't afford it."

Even in these tough financial times, it's a great opportunity to teach your kids about the values -- and limits -- of money.

"Parents used to put off money talks, saying, 'I'll do it when they're older.' But now it's a necessity," Gallo says.

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