The best method for raising financially responsible children is for the parents to be financially responsible themselves. You cannot teach your children what they should do if you yourself don’t do it. You first have to get your own financial house in order. Children don’t do as you say – they do as you do. They study your every move, and unfortunately, plenty of parents pass on some very damaging financial practices.

Children who watch their parents ring up huge credit card bills buying luxury items and taking vacations they can’t afford tend to dig the same financial holes themselves as adults. A child who sees bills pile up unpaid is getting a damaging lesson in managing money – one they may struggle all their lives to overcome.

Another way you can ruin your child’s financial future is by spoiling them. Many people seem to have convinced themselves that showering their kids with everything they want is good parenting. They lose the ability to say no to anything their child asks for. Then when that child gets out in the real world on a low starting salary, they have no sense at all of financial restraint. They still expect to be able to have everything right now. Of course, credit card companies are happy to assist them in getting what they want right away. It doesn’t take long for a child who has been spoiled their whole life to find themselves buried in $5,000-$10,000 of credit card debt.

Along those same lines, you shouldn’t buy your children something every time you take them with you to the store. It’s not a matter of being able to afford to buy them something, but rather an opportunity to teach financial restraint. Buying toys and gifts for your children should be reserved for special occasions (e.g. Birthday, Christmas, etc.). If you simply buy everything your children wants, you are not only taking away the “specialness” of gifts, you are setting up your kid to be a financial wreck. The children who get everything they want when they’re young end up struggling with debt the rest of their lives — simply because they were never taught moderation and living within one’s means.

Of course, parents can also teach their children bad financial habits by spoiling themselves as well. Very few families seem to know how to live within their means. They seem oblivious to the risks of spending more than they earn. In fact, they seem more concerned about the perceived shame that might come if they tried living within their means. Keeping up with the Joneses has never before been so pervasive in our culture. It’s impossible for you to teach your children how to handle peer pressure if you can’t resist it yourself. Spending money just to impress someone sends the wrong message to your children.

Of course learning how to manage money is something children have to learn by experience. Giving children a lecture about how to handle money is not enough. Children need to learn and experience it.

One great way to teach your children about earning and managing money is by giving them a regular allowance. This gives children first-hand experience in learning how to manage money and appreciate the value of their hard-earned dollars.

In addition, having an allowance will help children set financial goals and learn how to live on a fixed-income/budget. It will require them to make choices about what they will spend their money on. They will have to learn to balance what they have with what they want. They also learn that everything has a cost associated with it. Just because it’s advertised on television doesn’t mean that you can afford it.

Of course a child shouldn’t be paid for every little thing they do around the house. Each child should have regular household chores that they are required to do because they are a contributing part of the family. Then there should also be additional tasks and responsibilities for which they are paid an allowance. These tasks provide children with an introduction to the notions of work and receiving payment for the level and quality of the work they do. An important part of giving an allowance is that your children learn that if they don’t do the work and just as importantly, if they don’t do quality work – they don’t get paid.

Allowances can also be useful tools for teaching your children about other values. For example, teaching them that the first 10% of what they receive belongs to the Lord. Requiring them to deposit a certain amount each month in a savings account teaches them about frugality and long-term planning. Helping them to decide whether to wait to buy something later rather than right away shows them about the value of patience and delayed gratification. An essential part of becoming a responsible person is learning to delay gratification. Yet popular culture encourages – and profits from – people seeking immediate gratification. Teaching children to delay gratification, through the use of allowances, will make them more resistant to the messages of “Gotta have it now!” with which popular culture bombards them, and will help them grow up to be financially responsible adults.

How much you decide to give as an allowance will depend upon your individual financial situation and the age of the child. It shouldn’t be such a large amount that they are never required to make any tough financial decisions and it shouldn’t be so little that it doesn’t allow them to practice financial responsibility. As the child gets older, the amount you give should increase.

It’s important that children learn that money does not “grow on trees”. Just because you have checks in your checkbook or credit cards in your wallet does not mean you have money to spend. An essential part of fiscal responsibility is learning to live within one’s budget. Your children have to learn how to respect money and use it properly. Money is not just a means of buying popularity or happiness. The most important lesson you can teach your children about money has nothing to do with how much you can get, but rather how to use what you do have.

While chasing high growth stocks over the last 15 years was exciting (at least while their stock prices were going higher), the market crash that seems to always ensue is finally taking its toll.

Many individual investors continue to keep their money on the sidelines following the bear market of 2008 when the S&P 500 plunged nearly 41%. In past years, these investors would have kicked themselves for missing the subsequent 44% rally that followed in 2009. However, these investors have few regrets after being burned so frequently by chasing these rallies in the past.

Gone are the days when these investors would accept Wall Street’s creative wisdom in order to justify inflated stock prices. Buying a hot growth stock at the right time could make you a millionaire regardless of how expensive the stock may appear. While a few made it rich, many more saw their stock portfolio’s crushed by chasing these elusive returns.

As investors survey the financial markets in 2010, a new investment style is beginning to look more attractive – dividend investing. Of course, it’s not a new investment strategy, but rather a tried-and-true investing strategy followed by financial icons from Benjamin Graham to Warren Buffet.

Investing in solid companies that distribute a portion of their earnings back to their shareholders used to be considered old fashion. Receiving a cash dividend each quarter was considered a nice-to-have, but certainly not a requirement for our investment strategy. After all, the real money would be made as management reinvested that money back into the business and the stock price soared as a result.

Now as investors view the financial landscape in 2010, a cash dividend is becoming almost a requirement. Investors want to invest their money in a company that will not only grow, but will also return a portion of their profits back to their shareholders. As the firm’s revenue grows, so will the stock price and just as importantly so will their dividend payments.

Gone are the days when investors are simply looking throw money at the latest growth story and hope the stock price doubles. Investors are now looking for more realistic returns and they are now accepting the fact that dividends will account for a significant portion of their total returns.

As companies recognize the increasing trend towards dividend investing, we are likely to see more companies initiate dividend payments. And those that currently offer dividends will seek to increase their dividends. It will become increasingly unpopular to continue to reinvest your earnings back into the company without providing a dividend payment that returns a portion of those earnings back to your investors.

Currently, 29 out of the 30 stocks in the Dow Jones industrial index offer a dividend payment of some type. However, it’s only a matter of time before the one holdout, Cisco Systems (CSCO: 20.4099 -0.97%), begins offering a dividend. They can certainly afford to with $35 billion in cash sitting on their balance sheet.

Strong companies that offer solid dividend yields like Pfizer (PFE: 16.87 +0.60%), McDonald’s (MCD: 74.83 +0.62%), and Coca Cola (KO: 58.20 -0.15%) will become the investments of choice. These blue-chip stocks may not double overnight, but they offer solid earnings growth and a commitment to pay dividends back to their shareholders.

Looking deeper into these “strong” earnings performances, you will find that they were driven almost exclusively by cost cutting. The Wall Street Journal ran a story last Friday highlighting the fact that companies have been furiously cutting their Selling, General and Administrative (SG&A) expenses. The primary component of this expense line is people.

Since the beginning of 2008, nearly 6.7M people have lost their jobs due to the recession. Companies that faced declining sales moved to reduce their expense structure by announcing mass layoffs in hopes of preserving their bottom line earnings.

While many of these cuts were painful (especially for those workers who are now without at job), they did deliver cost savings. It was the cost savings from these layoffs that resulted in last quarters strong earnings performances.

However, the vast majority of companies still face declining sales numbers. Reports about “green shoots” in the economy is encouraging, but until the American consumer begins spending again it’s difficult to see many companies posting sales growth in the near term.

Fortunately over the next two quarters, public companies will have some relatively easy comps given the economic fallout that occurred in the last half of 2008. However, beginning in the first quarter of 2010 those comps will get more difficult. Companies will no longer be able rely on their headcount reductions of the last 12 months to deliver cost savings. So what then?

We can hope that the economy will be in full recovery mode by early 2010, but many economists believe that is unlikely. Without a recovery in consumer spending, revenues will continue to decline and companies will need to look at making more cost cutting initiatives. This could lead to potentially more layoffs in 2010 as companies try to deliver better than expected earnings performances by reducing their cost structure.

Unfortunately, this will only have the effect of driving the U.S. unemployment rate even higher. An unemployed consumer is unlikely to make many purchases which will only lead to further revenue declines for American companies.