Teach financially smart kids by example?

An etract from The Sunday Times, Jan 15,2012...

For parents wondering how to pass on financial wisdom, Ms Zimmerman suggests starting

with the ABCs:

"A” is for allowance, where a child earns a certain amount for doing a job.

“B” is for balance, where you tell kids that you don't want to spend all of your money
        right away because there are things you want to save for;

“C” is for charity or contributions to causes the family cares about.

The most important thing parents can do to teach their children about money is not only to lead by example, but also to share what they are doing, Ms Zimmerman says.

Her advice? Ask children where they think money comes from the next time you visit the ATM. "Of course the kids don't get it," she says. "It's not an endless money machine, and that's the start of a great conversation you can have with your kids."

That practise-what-you preach mentality on living within your means is at the heart of Money Savvy Generation, a company that develops products to teach basic personal finance skills to school-age children. Founder Susan Beacham practises what she preaches with her daughters, Allison, 2O, and Amanda, 17. Since she was eight, Allison has had her standard piggy bank replaced with what Ms Beacham calls a "Money Savvy Pig" - a special bank she developed that has four slots instead of one.

The slots correspond to "save”, “spend", "donate" and "invest”, helping children grasp the abstract nature of cash allocation in a concrete wav. Before Allison started college, she sat down with her parents and created a spending plan. "We do this each August and she lives within her budget all year," Ms Beacham says.
When her daughter considered moving into a student apartment, the budget played a role in getting her to reconsider. "One of the big mistakes kids make is to move into an apartment, when it costs twice as much. Indeed, delayed gratification gets to the heart of what separates doers from dreamers.

Ms Braxdale offers: "lf there's something your child wants, that's a great opportunity to say, 'Okay, this is how much it costs, this is how you can get that money, and here's how you can reach your goals'."