A Guide for Silver Spoon Parents

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On page 89 of the new book Silver Spoon Kids, a guide for wealthy parents on how to raise fiscally responsible children, is a list of the 10 worst things you can say to your kids about money. Things like: We can't afford it, Time is money, and We'll talk about it later.

I wasn't guilty of them all, but enough to start me thinking. I want my kids to work hard, appreciate what they have and give to causes they believe in. Yet we live in an age when "affluenza" makes the cover of Forbes, and young adults have serious credit-card problems. Does the fact that my daughter sees me whipping out my credit card several times a day mean she will be back on our doorstep with her hand out at age 25?

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Hoping not, I dug into this book, written by Jon and Eileen Gallo, husband (he's an estate-planning attorney) and wife (she's a psychotherapist), who have spent the past 17 years raising their three kids. And I came away cautiously optimistic. The Gallos, it turns out, are realists. They believe it's normal for children to want everything they see on TV. They know that kids can be relentless. And they're not of the opinion that money is a bad thing; quite the opposite in fact. "We tell people money never hurt anyone," says Jon Gallo. "It's money without values that's the problem."

But how do you instill the right values in your kids? It's a matter of showing them three things, according to the Gallos:

Show them balanced behavior by separating wants from needs. One parent the Gallos worked with watched her daughter run down the Barbie aisle at Toys "R" Us and insist she "needed" a purple purse for her doll. The mother paused and said, "Your Barbie already has a pink purse. Do you think she needs a purple one too?" On her own, the little girl decided no.

Show them the money. Giving your kids money — an allowance when they're young and, the Gallos suggest, a prepaid credit card like Visa Buxx when they're teens — is key to teaching them how to live within their means as adults. Use the start of an allowance (or a raise) to discuss what your kids are expected to do: Are they responsible for buying their own candy at the movies, their own CDs at the mall? Are they expected to save some and give some away? (For youngsters, I've recently come across a terrific plastic piggy bank called the Money Savvy Pig. It's clear (so the kids can see money adding up) and has four slots, one each for saving, spending, investing and donating. You can get it on the Web at www.moneysavvygeneration.com for $14.95.

Show them how to give. Particularly when they are young, they're open to the message that they need to help. Spend a morning stocking the shelves at a local food pantry. Walk with them for causes like breast cancer or heart disease. Help them count the change they save, then write a check for that amount to a charity they choose. And be sure to request that the thank-you note comes to them.

For more tips, log on to jumpstart.org or galloinstitute.org