The dos and don'ts of teaching your kids about money

3. Do start giving your kid an allowance at about age five or at the same age when you start expecting and asking them to pick up and put away their toys, help with the dishes or fold laundry. In other words, make it clear that there is no free lunch. Let them know what your expectations of them are and that if they accomplish the tasks you set out for them, they will receive a certain amount every week -- to save or spend.

4. Do offer kids a chance to earn extra income around the house. No, don't pay them to clean their room or walk the dog they begged you to adopt, but washing windows, trimming the hedges, vacuuming out the car -- these are tasks no one really wants to do and they should be worth a couple of bucks.

5. Do encourage older kids and teens to look for work and other means of generating income outside the home: Babysitting, dog walking, lawn mowing, you name it. There is nothing more satisfying and ego-building than enterprise and earning.

6. Do help the kids set up a lemonade stand or car wash, but take it one step further. Don't just provide them with the cups and drinks or soap and water. Rather, explain that you expect to be paid for your supplies from their earnings. This is a major lesson in the value of work and the meaning of an agreement.

7. Don't give them everything they ask for and don't feel guilty about it. It's vital that little folks learn the difference between need and want. Of course you will do your best to provide for them everything they need, but they don't need a new iPod when the one you got them for Christmas two years ago works perfectly well.

8. Do make deposits into your own savings account in front of the kids. Tell them about it and explain what you are saving for -- a rainy day, their college tuition, a cruise or retirement.

9. Don't restrict them in the spending of their money. Kids do well to learn about spending as well as saving -- after all, there is smart spending and silly spending. In other words, don't micromanage their money for them -- let them make a mistake or two. As Karges says, "Better now than later when they're buying a house or car."

10. Do teach responsibility. If Billy can't be bothered to put his bike in the garage and it gets stolen, don't replace it for him. Let him save to buy another. It's tough love and a fantastic lesson learned about taking responsibility, how much things cost and how much work goes into having the things we all want.

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