A rewarding summer project: Teach financial literacy

Q: I've been pushing our middle school to teach about finance, but the principal says it's not the school's job. With the economic crisis, it seems pretty important. How can I teach my kids the value of money?

A: The Great Recession has brought this need into focus. But I'm sympathetic to your principal: There aren't enough hours in a school day to teach everything wished for or required. Why not make this a family summer project?

Financial literacy should be your goal, not just budgeting or balancing a checkbook, say Eileen and Jon Gallo, authors of "The Financially Intelligent Parent" (NAL Trade, 2005). They say kids learn to behave responsibly and make wise choices within a context of values and money behaviors. They suggest using an allowance, not tied to chores, to teach saving, investing, giving and reflecting, in addition to wise spending.

The Gallos say you first need to be aware of your own values, spending patterns and priorities. "Children notice how you spend your time and money. Financially intelligent parents are highly conscious of their spending habits, how they balance work and family time, and the values they communicate." On their website, fiparent.com, the Gallos describe eight behaviors that will help families of all economic backgrounds raise fiscally responsible children.

Financial journalist Jayne Pearl says kids need "learning capital" from allowances, gifts, loans or payment for work. While her book, "Kids and Money: Giving Them the Savvy to Succeed Financially" (Bloomberg Press, 1999), was published before credit-default swaps made headlines, its clarity and common sense can help the whole family improve financial decision-making.

Take advantage of the many financial teachable moments in each day, says Dr. Prakash Dheeriya, professor of finance at California State University-Dominguez Hills and author of the series "Finance for Kidz." "For example, when driving, show children the prices on gas stations and discuss why they change so often. Explain the price fluctuation using concepts of demand and supply."

Take your children grocery shopping. Ask them to pick an item and discuss how to choose by comparing price, weight, expiration date, brand and so on, says Dheeriya. Use coupons in kids' presence and show them the savings. Discuss when its wise to buy in bulk. Look for bargains at garage sales and flea markets. "When paying for a dinner at a restaurant, ask your children how you should pay for the meal: cash, check or credit card? Talk to them about pros and cons of credit cards."

Find a bank that encourages children's accounts and open savings accounts in their names, and request ATM cards, Dheeriya advises. "Show them how to deposit cash using an ATM and how cash is withdrawn. Ask them to keep a running total of their balance."

Most important, he says, is to "help your children learn that money is just a tool, and they don't need it to make them happy. It is a means to an end and not the ultimate goal in life." For a list of his books and more tips on teaching children about money, go to Finance4kidz.com .