Talking with your kids about money is tough. We've known parents who would rather explain to their four-year-olds why Bambi's mama isn't coming back than reveal how much money they make. And we think that's a shame. You may not owe your kids a car when they turn 16, you may not owe them a college education, you may not even owe them an allowance, but you do owe them an education in money.
To get you started with your curriculum, here are 10 lessons about money that we think every child should learn before they start out on their own.
1. Debt sucks. Yeah, adults know that word, too. (You may not normally use such blunt language. That's OK, the shock will give your words maximum impact. Or you could say, "When you go into debt, you give someone else control over your life, honey. That's a bad thing.") Credit card companies are in business to make money, not to help people out. Though it may seem like they really like you -- after all, they send you "convenience checks" and give you perks like airline miles -- their true mission is to keep you in debt until you die. That said, credit cards can be a wonderful convenience... if you don't let them trick you into spending more than you have.
2. Pay yourself first. No, that doesn't mean buying a DVD player with your first paycheck. It means putting money away for emergencies and goals. Your savings account can keep you out of debt when you hit those inevitable potholes in the road of life. Debt enslaves you, but a saving account keeps you free.
3. It's the little things that get you. You could drop $4 on a frappuccino at Starbucks or a silver hoop nose ring every day. Or not. Investing just $4 a day in the stock market (which has historically returned 11% per year) could earn you more than a quarter-million bucks in 30 years. Which will it be: a latte now or a lot of speed boats in the future?
4. Invest in a market index. Savings accounts are great for emergencies and short-term goals, but to reach your long-term goals, you need the power of the stock market. With index investing, it's simple to get market-matching returns that, over time, could make you rich. The best part may be that you can refer to yourself as "a stockholder" at your friends' birthday parties.
5. Start a Roth IRA as soon as you start earning money. Think of it as saving for financial independence instead of retirement. Whatever you call it, saving early beats saving late every time. A maxed-out Roth invested in an index fund (see #4) could make you a tax-free millionaire.
6. (Take a deep breath) Let me show you the family budget. Here's how much money we make. Looks like a fortune, right? OK, here's where it goes. See how much goes for taxes, right off the top? Now we subtract this much for our savings, and this much for the mortgage, and this for the car, and this for your college account, and this for food, and this for... Hey, wake up!
7. "Budget" isn't a bad word. You need a budget, too. Track your income (allowance, cash gifts, babysitting and lawn-mowing money) and your expenses. Then you can figure out how long it will take to save up for those roller blades or rocket boots you want. Budgeting doesn't have to be hard. It can be as simple as A, B, C:
A) Pay yourself
B) Pay your bills
C) Spend no more than what's left.
8. Keeping up with the Joneses (or P. Diddys) is a sucker's game. Read The Millionaire Next Door. The Joneses could be head over heels in debt and sick at heart over it. P. Diddy's new BMW convertible is probably leased. Don't let the glitter fool you.
9. Don't trust anyone. When it comes to your money, you can't abdicate responsibility. Many financial "advisors" have conflicts of interest -- their advice is designed to maximize their commissions, not your money. Others are simply incompetent. No one cares as much about your money as you do (except your parents, who only want the best for you, of course!). Since anyone can get market-matching returns easily and inexpensively through index investing, you'll never need to rely on expensive advisors who think of you as an ATM.
10. Money can't buy happiness, or love, but it can help you avoid many kinds of misery. You'll have to find your own happiness, but it's easier when economic hardship isn't dominating your life. So don't even try to buy happiness. Instead buy security for yourself and your loved ones, then find happiness in them.
Thanks to all the Fool staffers who helped with this list. Have you got some special words of wisdom that your parents shared with you or that you wish they had? What are you telling your kids? Share it with our readers on the Foolish Specials discussion board.