The first step in teaching kids about money is to model a lifestyle of financial stewardship before them. The three major areas where people fail in money matters are:

1. living a consumptive lifestyle

2. failure to live on a budget

3. debt accumulation

We as parents should begin teaching our kids by living a simpler lifestyle, living on a budget, and minimizing debt. ...

Tips to Teach Kids About Finances

Practice What You Preach

Probably one of the silliest sayings is "Do as I say, not as I do." Nonsense! Your values are more likely to be caught by your kids as they watch your behavior than taught by endless lectures.

Family Is a Team Sport

This means that every member of our family has a role and responsibilities. On the other hand, every member can share in the rewards and family income, too.

Being Alive Doesn't Qualify You for an Allowance

By tying in allowance with responsibility, we teach our kids that their choices have consequences. In the real world, a boss won't care how cute your child was as a baby. A boss will require performance and productivity for promotion and a paycheck. The key is to tie in an allowance to responsibility rather than connecting the allowance with doing basic, expected chores.

Consistency Is the Key to Parenting (and Insanity Is the Key to Consistency)

Sometimes I feel like the sergeant in the movie Forrest Gump as my children respond in monotone, "Y-e-s, Drill Sergeant!" Being consistent when all five of our kids were under seven years of age meant an endless round of physical activity (get up, pick up, clean up, and wait up). Now it means following through on standards we've set and defined. If we can launch our children into the world with our sanity intact, then I think there's a special medal waiting for us-but we'll have trouble remembering where we put it.

Show Kids What Matters Most

If you talk about the new car you're going to buy first and then try to figure out how to pay for it, your listening child is going to conclude, "Okay, I figure out what I want and then finagle a way to pay for it!" On the other hand, if you discuss your need of a new car and pray as a family for God's provision, then your child learns, "God is the provider of all our needs." What matters most to you in life? If you don't know, I'll bet I could ask your kids and they'd tell me what matters most to Mom or Dad. In a day of materialism and a lack of delayed gratification, parents need to define the things that matter most and live as if they really believe it.

Work Is Not a Four-Letter Word

When our oldest son hit adolescence, we never knew if Daniel or his evil twin, Damien, would walk down the stairs to greet us in the morning. When the ugly twin arrived in the kitchen with an attitude to match, it was our cue to give him something to do other than terrorize his siblings. We literally worked the 'tude out of him, and believe it or not-it worked every time! In the process, he learned the value of work and now has a great work ethic. It's up to us to help our kids develop a good work ethic-they won't learn it in school or muddling through a job as well as they'll learn it from their dear old Ma or Pa. …

Prepare Them for the Real (Real Expensive) World

Teaching kids about budgeting, saving, tithing, and investing is what the real world is all about. They won't graduate from high school and start making $50,000 a year as a vice president with an expense account-they'll have to earn both over many years. Preparing our children means being transparent about our finances and showing them what we really do with our money. This will give them life skills that will give them a real advantage in real life.

Excerpted by permission from Money Doesn't Grow on Trees: Teaching Kids the Value of a Buck, copyright 2002 by Ellie Kay. All rights reserved. Published by Bethany House Publishers, Minneapolis, Minn., www.bethanyhouse.com, 1-800-328-6109.

Ellie Kay has moved eleven times in thirteen years and has five children. She knows firsthand the value of balancing family responsibilities and a pocketbook. Ellie is the author of several other books. She and her husband, Lt. Colonel Bob Kay, along with their children, make their home in New Mexico.

How have you tried to help your kids learn about money? How have the lessons you learned about money when you were a kid helped you as an adult? Visit the Books Forum to discuss this topic. Just click on the link below.