Until Money Starts Growing on Trees, Try This

Those who lived through the Great Depression must scoff at our angst over current economic woes, thus far anyway. Not that it hasn't been rough, and indeed devastating to countless families, and it's far from over yet. In our children's myopic experience, it's catastrophic, in view of the suped up consumer culture in which they are being raised. If nothing else this experience is a huge wake up call to return some sanity to our methods of managing our money, and that calls for some back to basics money management lessons for ourselves AND our kids.

It isn't just affecting some of us anymore. The Christian Science Monitor reports that the effects of our economic uncertainty has now reached into the wealthiest classes, and they to are now beginning to show signs of "reconsidering their spending." Many economists now see that we are at a point of a "transformation:"

Growing numbers of economists believe that America is now in a
transformational economy, where consumer spending may play a lesser role, as
households belatedly recognize the need to "right size" their lifestyles. For
many families, comparison shopping has become an essential practice.

Families that have been able to get by without making and sticking to a basic budget, are now finding that it is essential to do so. Many are unequipped to do so however, and don't know where to begin. Good Morning America and USA Today have recently teamed up to conduct a "Frugal Family Challenge." Two average families are working over thirty days to tackle their money management, or lack thereof, and improve their economic conditions. First is to tackle everyday spending, and then to work out saving for education expenses and retirement.

It may also be tempting to tap into retirement investments now, but advisers caution strongly against this, and advise good basic money management techniques, coupled with a savvy approach to the current conditions in the investment markets. Lost funds now, equals less miraculous compounding later when you will really need it, given the state of Social Security.

Ultimately, some return to common sense money management is in order, and parents especially need to actively teach their kids how to handle their money well, or factor them strongly into your retirement expenses! You can and should start early. Economist and mom, Gloria Nye, advises starting small. She advises parents that even if you don't feel you have the best money management skills, "you can begin to teach your children and learn more yourself in the process."

One innovative stockbroker dad, and now author, David Owen, decided to go into the banking business of sorts, and set up "The First National Bank Of Dave," because he recognized that "for kids to learn about money, there has to be something in it for them." He operated his bank much like an actual financial institution, with a few kid friendly adjustments, such as realizing that a month can seem like a year to a small child, so to be engaged they need to see results more quickly. He chronicled his experiences in the book The First National Bank of Dad, and teaches parents specific and actionable steps to help your kids gain sound fiscal management abilities.

Taking these steps may not always stop the whining that attends the release of the latest gadget or gizmo that your child covets (or you for that matter), but ultimately when it's their own money, that they have an active hand in managing, that they are spending, they may reevaluate it's priority in their wants. And as a parent, you may do so as well.