How to Keep Your Kids From Making Financial Mistakes

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Watch out, Bugs Bunny. Warren Buffett is voicing an animated version of himself in Secret Millionaires Club, a Web-based TV series designed to educate children on practical business and financial situations in a fun way -- and he's not half bad. The program isn't about getting rich; it's about being prudent -- an approach to wealth that can't be taught too young.

There are two big concepts when it comes to financial literacy. The first is saving, which boils down to living below your means and avoiding traps like credit card debt. If you're able to instill a savings mentality and set aside money regularly, then you can address the second crucial piece of financial literacy: investing. Here, a little common sense goes a long way. Avoid speculating, trading, or any other get-rich-quick schemes. Invest in solid businesses with long-term outlooks. Be patient, add regularly, eschew high fees, and don't trust anyone who makes unrealistic promises -- especially "free" financial advisors, "gurus" like Robert Kiyosaki (Rich Dad, Poor Dad), and media commentators like Jim Cramer (Booyah!).

As Foolish investors, you're probably already ahead of the curve when it comes to financial literacy, but there's a good chance friends and family -- particularly your children -- could use your help.

Helping kids
With children, you want to emphasize early that happiness comes from friends, family, accomplishments, and experiences -- not excessive consumption. It can help to introduce kids to financial choices and budgeting by giving them an allowance, matching their savings, and, if they're old enough, encouraging a part-time job or paid chores for neighbors. This helps emphasize that money doesn't fall from the sky; it comes from hard work. Unfortunately, this knowledge is skimped on in schools, and you always have to fight the influence of TV, advertising, and the seemingly ever-present consumer ethos of our society. But if you start early and make an effort, you'll be ahead of the game. 

Helping adults
It can be a more difficult task to help older friends and family get on the path to financial health, especially if they're heavily in debt. But that doesn't mean you can't have an effect, starting with sharing how you've benefited from personal financial responsibility. To help even more, The Motley Fool has one of the best personal-finance resources on the planet available -- Motley Fool Rule Your Retirement, led by advisor Robert Brokamp, CFP.  

Foolish bottom line
So take the time to pass along your knowledge and help someone else become financially secure. It's not just responsible -- it's Foolish.

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