Allowances, rules and money management lessons won't be effective if your kids don't observe you making smart decisions about money, says Richard Bavaria, Sylvan Learning's senior vice president for education outreach. "Be a role model," he says. "Show how you have a savings account, how you shop wisely, how you've put off your own wants until you can afford them comfortably, one at a time. Postponement of pleasure is a grown-up characteristic, learned from grown-ups."
In addition to disciplining yourself to use smart money habits, make sure you point out to your kids how those habits work in your day-to-day life. "You have a budget and spending priorities. So should your child," Bavaria says. "Show how you set up a budget and stick to it. If you've had money troubles in the past, tell your child how it made you feel and the difficulties it caused. Talk about your work and how your salary is based on the work you do. Show how your earnings reflect the health of your business and the economy. If your family is enduring a difficult time, find a way to talk about it an age-appropriate manner."