A quick reminder: Tonight is the 100th episode of Til Debt Do U$ Part on Slice @ 9:00 and the first airing of the show on CNBC in the U.S. @ 10:00 and 10:30. For new visitors joining us, welcome!

Here’s the 100th episode interview at TV Guide.

I talk about how important it is to teach our children about money a LOT.  And I practice what I preach. As we were on our way to the beach one day, Alex said, “I love these drives. I learn so much about money every time we head out to the beach! Funny, I didn’t realize the drives had turned into mini-lessons. But each time we’d start out, she’d ask some question that would set me on a roll.

You can teach your children about money in all types of situations: when you’re shopping, while you’re paying the bills, or even while you just out driving. It’s best when the kids’ ask a question that opens the door. But sometimes you can say something that gives your kids an “oh, really?” which they will follow with a question, and then you’re off to the races.

You may not always have a “lesson plan” at hand for what you want to teach, but if you have a good idea of how you want your kids to feel about, and deal with, their money, you always have a framework within which to work. And whether you’re talking to a child, a young adult, or some family member or friend who has yet to see the light, having a core set of messages makes it easier to avoid being distracted by the minutia. Here are mine:

1. It’s not how much you make, it’s how much you keep. I’m a saver by nature, and I’ve tried to instill the habit of saving in my kids from a really young age. If you always spend every red cent you make, it doesn’t matter how much you make, you’ll never have anything. And if you don’t have a something set aside, you have fewer options.

While it might be easy to save when times are good, the real test of your commitment will be to tighten your belt and do without something you really want so you can keep saving even when the money is thin. And since you can count on the fact that times won’t always be good, having something set aside for the leaner months or years can save your butt.

Saving is an investment in your future. Whether you’re saving for school, for an emergency, or for retirement, having money in the bank gives you choices. And there is nothing better in life to make you feel you are in control than having choices.

2. Credit is good. Debt is bad. It’s all well and good to go out and put a $120 dinner on a credit card, but if you don’t pay that balance off in full when the bill comes in, you’re just dumb. Why? Well, you had a nice dinner right? Then you went home and pooped! Dinner is gone. But the balance you’re carrying lives on.

Credit isn’t evil. It’s a tool that must be used carefully. Know the rules, and you can use credit to your advantage. Have no self-control and credit will turn into debt and eat your future. It’s easy to buy stuff on credit that we think we must have TODAY! But if you can’t afford to pay for it in full TODAY, then you’re simply indulging yourself. Unmanaged credit has a way of haunting you for eons. Look at all the people who miss a couple of payments and then watch their interest rates skyrocket because their credit score has gone into the tank. Do yourself a favour: outside of the things that will outlast the credit you may have to use, like a car or a house, don’t step into the quagmire of debt. Instead, use credit to your advantage – to build a good history, for example – so when there are things for which you must borrow you can do it on the best terms.

3. Keep talking, Keep learning. We aren’t shy about money in our house. We talk about how to use it. We talk about the mistakes we make. We learn from our mistakes. And all the while I try to impress on my kids that everybody has their own path to walk. Figuring out what’s important is the first step. The next step is doing something to make what’s important shine.

While I may do my best to teach my children about how money works, it will be up to them to pick up the reigns of their own financial education and keep learning. There are always new things to think about: new products are offered, new investment alternatives are created. If you aren’t constantly learning new and better ways to manage your money, then you’re just proving you don’t really care about it very much. There are tons of great books to read about finance.  And while they may decide that they do not want to be their own investment specialist, insurance specialist, estates specialist, they should at least learn about the choices they are making.

I hope that since it’s been okay to talk about money with me, my kids will also want to talk about money with their partners. Developing financial goals then laying out the plans for how to achieve them means you’re working together… and that’s really important if you want to stay married.

4. A good financial plan is balanced. If you prioritize home ownership over everything else – you don’t save for retirement, you don’t have enough insurance, you don’t have an emergency fund – it is only a matter of time before your plan falls apart. A sound financial plan has a firm foundation that covers all the bases. Putting all your eggs in one basket is a good way to see your plan scrambled if you stumble. (This applies just as much to your whole plan as it does to your investment portfolio.)

I know “financial freedom” is all the rage, but I’ve watch people sacrifice their present to try and achieve a financial goal without really ever understanding what they are giving up. If you’re just accumulating a crap-load of money in the bank, what’s that all about? I would much rather my children understand that balancing today’s needs and wants with tomorrow’s is the key to managing money well. Yes, they need to save so they have options. But if they prioritize more savings over having a life, then all they end up with in the end is lots of money. I’d rather have some money and some life, and I’d like to demonstrate how important that is to my children by showing them that you can save, spend sensibly, and have a great time too.

5. Be conscious about how you spend your money. I watch so many people blunder through their lives, spending money without thinking about it, and then crying about what they can’t have. If you’re operating without a plan – read “budget” – you’re at the whim of whatever you’re dealing with at the moment. Without a plan, it’s pretty tough to stay focused on the big picture. Sure you’re burnt out and would love a vacation, or you’ve been studying your nuts off and would love a night out with friends, but if you’re spending next week’s rent money, grocery money, or telephone bill money to do it, you’re going to be very sorry.

Having a budget means you’re making a conscious decision about how you really want to spend your money.  It is about being aware of how much you have, and prioritizing thoughtfully so you can cover the bases on the things that are important to you.  It isn’t about “doing without.” It’s about “living within” (your means).

Okay, your turn. What are your top five money lessons — the things that form the core of your financial philosophy?

Today’s is the final installment in the Teaching Kids About Money Series. I hope you’ve enjoyed it and learned some things you can use with your own kids. 

Think back to the effort, patience and time it took to potty-train your beautiful toddler. Remember the effort, patience and time it took to teach your child how to ride a bicycle, skate or swim. Money management is the term for a whole bunch of individual skills wrapped up in one neat package. But each of the skills needs to be taught, practised and reinforced. And each takes time to acquire.

You have the most influence in terms of teaching your kids about money. After parents, in rank order, teachers, personal experience, books or magazines, television, friends and siblings are the sources for money information. Since what you do and say will have the most impact on your children, you have to be sure you say what you mean and you mean what you say. An honest, straightforward approach to explaining money matters works best. Don’t take the easy way out. “I don’t have the money to buy you that thingamajig” as a pat answer for each request you don’t want to fulfill teaches little. Instead, use each opportunity to teach the important lessons of budgeting, relative value, prioritizing and patience.

By the time your children go to school, they will have already learned a lot from you about money. Even if you choose not to take an active role in teaching your children about money, they will learn most of what they take into their future lives from what you do (as opposed to what you say). If you save regularly, they will see savings as an important part of money management. If you are an avid investor, they will develop an interest in investing. If you regularly donate to charity, your children will likely follow your example.

They will know whether you are an impulse shopper or a planned spender, whether you are generous or miserly with your money, whether you see money as a tool or as a god. If you comparison shop, they will learn from you. If you place a strong value on expensive brands, they will hear your message.

I knew a couple who were distinct opposites when it came to money. The father was a generous spirit who impulse bought and loved to satisfy his children’s every wish. The mother was a tightwad, begrudging most spending. The father’s attitude was, “Money is a tool for making our lives more comfortable.” The mother’s attitude was, “We don’t have enough money.” The father gave his children money to buy gifts for loved ones. The mother expected her children to fund their gift-giving themselves.

The messages this couple’s children received were very mixed. While that’s pretty usual for many families, it doesn’t help to promote learning, since inconsistent messages are confusing for children. If you are teaching your children about money as a couple, it’s important you develop a joint plan about what you will teach.

Differences in style are natural. How you demonstrate those differences to your kids will have an impact on the lessons they eventually put to use in their own lives. Talk about how you want to teach your children the important money lessons. Starting from a shared belief — even if only in the basic ground rules — will go a long way to delivering a consistent message to your children. Good luck and remember that lessons learned with laughter last longer!

BTW, there are two new Gail Club forums… one for Edmonton and one for Separated, Divorced and Single Parents. The traffic is building well on the board, and the sharing of information does my heart good. Congrats to those who have actually managed face-to-face meetings. I know it’s tough with busy schedules. Those of you who are managing groups deserve kudos for tenacity and determination. Cheers to you all.

Funny Money: When was the first credit card made, and who made it?

The first time most kids learn about credit is when they go off to university and the credit card companies start throwing cards at them. Hmmm. With no experience and very little understanding of the long-term negative ramifications, kids start to charge. And they charge, charge, charge until they’re in a hole. Did you ever take the time when you were using your credit card to purchase gas or pay for a new bathing suit to explain how credit cards worked? Did you take the time to show your children that you’re only putting on the card what you can afford to pay for when the bill arrives? Probably not.

Even relatively young kids can get in on this lesson. Issue your 10-year-old a credit card on The Bank of Mom & Dad. (Have her design it herself, if you like.) Draw up a cardholder’s agreement that both of you sign. Set a really low credit limit ($10 is lots), and a deadline for paying it off before interest charges apply.

Your child can now use her credit card when she goes shopping with you. If she sees something she wants to buy, she gives you her card and you make the purchase on her behalf using your money. You give her a charge receipt. Remind her that she’ll have to save her allowance (or babysitting money) to pay the bill when it arrives.

If she spends more than she can afford, or makes her payments late, you’ll have to charge her interest on the balance. Use 25 percent as your interest rate for this exercise, and don’t give in. When she sees that the $10 item actually costs $20 over the long run, she’ll know that credit cards should be used with caution.

Once you’re child is sixteen or so (you’ll have to gage his maturity), you should get him an actual credit card (it may be in your name) and start him using it and repaying it regularly. This is a habit, and one well worth the effort to form.

Don’t skip steps because you think they should be obvious to your teenager. Start by explaining how credit cards work. Emphasize the connection between charging one month and paying the next. Stress that credit is not “free money” unless the balance is paid in full before the grace period expires. Explain interest and how it compounds if a debt piles up. Read the fine print and review key terms such as late fees and over-balance charges. Talk about how to keep the card safe, and what to do if it’s stolen or lost.

Set limits and monitor your child’s use of the card. They must prove their ability to handle the low limit you’ve established — $100 is good to start – before you increase their responsibility.  When they are old enough and ready for a card in their own name, encourage them to shop around for low rates and fees.

Discuss the importance of a good credit history and how a bad one can get in the way of future borrowing, whether they need to buy a car, rent an apartment or get a mortgage for a house. Show them how to get a copy of their credit report.

The U.S. Treasure has created an online interactive game called “The Bad Credit Hotel.” http://www.controlyourcredit.gov

Next week is the final part of this series: The Messages You Send

Funny Money Answer: The first credit card came out in 1951, produced by American Express.

BTW, Thanks to all who completed the questionnaire yesterday. Lots of great info there. And clearly y’all feel there’s a need for some consolidated, focused effort in teaching kids about money. I’ll summarize next week. In the mean time, encourage friends and family to do the survey so we can get a great sampling. Purrrrhaps the media will pick up on this a bit more and we can have a national discussion. Hmmm.

Last week I did an interview on CBC radio talking about financial education in schools. Seems there’s a board trustee at the Toronto District School Board who thinks that money should be part of the curriculum. Annie Kidder of Parents for Education thinks it’s a job for parents.

Y’all know what I think. It is ridiculous that we have kids leaving school with a focus on earning a living without the skills it will take to manage the money they will be earning. It’s absolutely pathetic that in 2009, we are debating the relevance of financial education as part of the school curriculum. And it is down right dumb that kids are being given access to credit (student loans) without being given any understanding of the implications of using that credit.

So here’s a short survey. I’d like you to pass this on to as many friends and family members as you can because I think this is important and the more feedback we all have the better. Leave your responses in the comments section, and I’ll go through them and amalgamate them. Then maybe we can come up with some ideas on how to finally slay the Money Ignorance Dragon!

1. Do you think schools should teach children how money works and how to manage it?
2. At what grade do you believe this education should begin? And end?
3. List six topics you think schools should cover when it comes to teaching money management.
4. What role do you think others (parents, bankers, community groups) should play in the education of our kids, specifically about money?
5. Do you agree or disagree with the statement:  Financial institutions should be held liable for lending irresponsibly when they don’t “educate” before they lend. (Elaborate if you wish.)
6. What three things about money do you wish you had learned earlier?
7. What mistakes could you have avoided if you’d known more about how money works?
8. What do you think it will take to change The System and ensure the next generation of adults knows how money works?
9. Do you have resources you would recommend to help schools, teachers, parents, help children learn about money?
10. What else would you like to say on this topic?

There’s nothing like a great back-to-school sale to get a person’s juices flowing. Shopaholic or not, the new school season brings out the crazed consumer in most. Clearly there are smart and not-so-smart ways to arm our kids with all the stuff they’ll need to face a new school term, but the distinction is not always clear. So here are some guidelines:

DO shop the sales. You can make your dollar go a lot further by gathering up the flyers and doing a little prep work. I buy my kids’ next season’s clothes at the end of the current season, usually at fifty to seventy percent off. Add up the cost of a snowsuit, boots, and the next-size school wardrobe and the savings are huge.

DON’T buy things you don’t really need no matter what a great price they’re going for. Going out of business sales and retail closures can tempt even the savviest shopper. Make a list before you go and stick to it. 

DO involve your kids in the experience. Giving them a budget to work with for school supplies or at least part of their clothing purchases will initiate them in the budgeting process. Help them to set priorities and to determine quality.

DON’T be unilateral, as in “You can’t buy that. It’s stupid.” Once you give your child the money you also have to ante up the responsibility or she won’t learn a thing. If she’s determined to make a bad purchase (in your opinion), let her. The consequences will teach the lesson. Just don’t stick your hand back in your wallet to rectify the situation when she sees the error of her ways. With responsibility should come accountability. Let her earn the money to rectify her problem.

DO hold off on shopping until you’ve done a complete inventory of what your child has and what he needs. If last year’s jacket still fits, that’s one less expense. And if you wait until he’s back in school to do the school-supplies run, you’ll end up getting what he needs, not what he thinks he needs.

DON’T forget about extra-curricular expenses such as sports equipment, music books, uniforms and the like. You’ll likely have to come up with extra money during those first few weeks of school to cover all sorts of activities, so hold some back when you’re off shopping.

DO stick to your guns about what you can afford to spend on your child’s clothes. Even if she has to have that jacket, you can say “No.” She won’t break. You could, of course, allow her to upgrade using her own money to make up the difference between what you’re prepared to spend and the brand she absolutely has to have

DON’T miss the opportunity to guide your kids. This is your job. Remember to keep talking about the cost in terms of what else that money could buy, as in “Sam, I know you really want those jeans, but you also wanted to save for your ski lessons. Which one’s more important to you in the long run?”

DO show your children your budget so they have realistic expectations. Many parents hate to talk about money with their kids. And they’re dead set against disclosing the realities of their financial circumstances. Then they get ticked when their children don’t show sufficient appreciation for how hard they have had to work to provide those no-name jeans. Well, if you don’t tell ‘em, how are they supposed to know? Being smart about money isn’t intuitive. It’s learned. And you are your children’s most influential teachers… of both good habits and bad.

DON’T burden your kids with the horrors of your financial mistakes. If this seems to be a contradiction of what I just said, it’s because there’s a fine line between being up-front and truthful with children, and burying them in reality. Kids deserve to feel safe. Telling them you haven’t got the money to buy groceries doesn’t add to their sense of security. What you want is to create a sense of reality for your children, not to worry them to death.