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How to Teach Kids About Money

You don't have to be Warren Buffett to raise a financially savvy kid. You don't even have to be good at math. The key? Establishing a conversation about dollars and cents -- and keeping it going as your child grows. Parenting and the National PTA team up to get you started.

"Do you mean a bank could steal their house?"

Of all the unsettling questions I thought my girls might ask as they grew up, the definition of bankruptcy and foreclosure was not one I anticipated. But one night last spring, as my husband and I were gossiping at the dinner table about the toll the economy had taken on our small town, my 10-year-old piped up with her query. Suddenly, I was explaining the basics of overspending and loans, getting a clear picture of how little my fourth-grader understood about either, and realizing how uncomfortable and unprepared I felt tackling the subject with her.

My unease, it turns out, is absolutely typical. Studies show that most parents feel the same way talking to kids about money. Unsure of their own financial skills, wary of playground blabbing, or having been taught that dollar talk is unseemly, many assume the schools will teach their kids what they need to know. Problem is, fewer than half of the states in the country require schools to provide any kind of instruction in personal finance at all. And in fact, experts say, teaching kids about money has to be a joint effort -- with the heaviest lifting coming from the home front.

"Schools can teach our kids about how to calculate compound interest and how to do the math required in their finances," says Neale Godfrey, the best-selling author of many books on financial management, including Money Doesn't Grow on Trees. "But, ultimately, how you manage your money is a values question. Only parents can -- and really should -- teach that."

The good news? You can begin a dual strategy of both showing and telling your child about budgeting, saving, and earning the moment he's old enough to understand that money is traded for things -- a realization that is well entrenched by kindergarten. From the list below, pick the strategies and activities that workbest for your family. They're listed roughly in order of age group, from those for the very young to older kids, but many can be adjusted up or down.