Money-saving tips for parents and kids

April 13, 2010 9:00:00 PM PDT
Financial illiteracy is on the rise at a time when it has never been more important to be financially responsible.The average college graduate has roughly $3,000 in credit card debt, and a total of more than $20,000 in overall debt.

Read MONEY Contributor Dan Kadlec's letter to his college-bound daughter about budgets, savings and interest.

Here are some of Dan's tips for teaching financial responsibility to YOUR children:

  • Talk about it. You don't want to scare your kids - especially the youngest ones. They need to feel secure and confident, but that doesn't mean you can't talk about money. Talking about finances is one of the best things you can do!
  • Teach the fourth "R." In school they teach you reading, writing and arithmetic - "the three Rs" which everyone knows about. There should be a fourth "R": Reality. Teach kids everything about money: mortgages, stocks, bonds and credit cards.
  • Ask for your kids' help! For example, if you're having trouble paying the electric bill, explain to your kids that you're having money issues and that you need their help to turn off the lights when they leave the room.
  • Put them on an allowance. Stop giving your kids money every time they ask or every time they walk out the door. Put them on an allowance and make them live with it. Don't be your kids' ATM!
  • Remain positive! Let them know that you have a problem but you're doing something about it, and they can help. Make sure that they know that everything will be okay, especially during extreme hardship. It isn't their fault and it isn't your fault.
  • Explain how credit works. If you're at the store with your child and you're spending money, spend cash if you can - but if you have to use a credit card, make sure you explain to your children how it works! Tell them you'll have to pay for it later, so that your kids don't think it's free. Show them the bill and show them how late fees work.
  • Draw a bigger picture. It can be comforting to point out to your children that other people around the neighborhood or country have the same issues, and that you're not the only ones suffering.

If dad and mom are having trouble finding a job, you can bet that teens are having a hard time too. Here is some advice especially for your teens:

  • They shouldn't give up! Teens should approach job hunting just like mom and dad.
  • Preparation is key. Teens should learn about the company, dress well and create a resume. Even if they don't have a lot of prior experience, this will create a good impression and make them stand out.
  • Live within your means. Teens should form good habits early, and stick to them - or they'll end up in debt.