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.

Financial incompatibility often is the result of radically different approaches that people have towards money. Although psychologists have many different groups that they like to categorize people into, for financial purposes most people fall within one of two categories: savers and spenders. You probably already know which type of person you are and usually you perceive your spouse as being in the opposite category. This is because opposites attract and is not always a bad thing!

Savers are often attracted to spenders because they see them as generous, fun-loving, adventurous folks. Spenders are attracted to savers because they think of them as grounded, fiscally responsible individuals. Having both a saver and a spender in a marital partnership can help achieve a good balance. Savers can end up living a miserable existence because they can’t bear to part with any of their money. Spenders can get so deep in debt that they can’t enjoy the things they spent the money on in the first place. There has to be a balance achieved between the two. Savers have to realize that financial security doesn’t demand stashing money in the bank to the exclusion of everything else. Spenders have to realize they can’t just buy anything and everything that they take a fancy to. So don’t despair if your partner has a different financial outlook on life than you. God put you together for a reason!

So what makes one person a free spending spirit and another a frugal saver? In most cases, people simply follow the example of their parents. Financially irresponsible individuals have probably grown up watching their parents make the wrong decisions as well. They simply never learned how to do things the right way. However, regardless of the type of person you are there are some actions you can take to help you get your financial house in order:

Develop a budget
A budget is a good first step in defining financial limits and long-term goals. A detailed budget forces you to balance income with expenses, while allowing you to make adjustments as needed. Constructing a budget should accommodate the needs of both partners, even if one is a spender and the other a saver.

Set long-term goals
Couples often spend more time planning their family vacation than they do discussing their long-term financial goals. So you first need to sit down and agree on your big-picture goals – things like saving up for a down payment on a house, funding a retirement account, or paying off the mortgage ahead of schedule, etc. Then set up a schedule to achieve those goals.

Share decision making
Develop guidelines for making major purchases, starting with how you decide what to buy and when. Going out and buying a big-ticket item without your partner’s knowledge or consent is definitely a recipe for disaster: Decisions on major items should be arrived at jointly – where to go for vacation, what type of new car to buy, etc.

Live on one paycheck
In 2005, 51% of families had both the husband and wife employed outside of the home. However, even with two-incomes many of these couples live paycheck to paycheck with total disregard for the future. Taking this approach can be the beginning of future money problems that can strain your marriage. Saving one of your paychecks can help build-up a nice down payment for a house or the expense of having children or just an emergency fund. You may not always have that second paycheck coming in. So even if you have two incomes, try to get by on only one paycheck and save the other.

Create a wish list
Both you and your spouse should sit down and create a wish list of things they would like to do or have. These items could be regularly occurring (going out to eat once a week) or they could just be one-time events (vacation to Europe). The challenge for the spender is to realize that they can’t immediately have everything on the list. On the other hand, a saver shouldn’t try to force a bare-bones existence on a spender. There should be items on your list that you can compromise on and there should be others that are joint goals that you both want. This is a long-term list and some things you may not be able to achieve for several years, but it will at least give you something to work towards. An additional benefit is that it helps you understand what is important to your partner and what they value the most. You may be surprised that some things that don’t cost that much are actually valued very highly by your spouse.

Have the spender pay the bills
If one person tends to be the spender in the family – have them pay the bills each month. This way they get a better understanding of how much money is going out each month compared to the income you have coming in to pay those expenses. It’s easier to spend money when you never have to worry with how those expenses are paid. If you are the one having paying the bills and you know there isn’t any money in the bank account, hopefully that will be a deterrent for you not to spend the money in the first place.

Set priorities
Spending time with your family should always take priority over trying to earn more money. Nothing can strain a marriage more than having one party always working late into the evening or working weekends just because they want to have more money. Having a higher standard of living isn’t just measured in by the size of your bank account.

Spending allowances
It might be wise to set aside some money each month to feed the spender’s need to burn cash. The amount should be budgeted, but there would be no need to keep track of where the money goes. This satisfies the saver by keeping the spending within limits and gives the spender some “free” money that they can use on anything they want.

Grow Up
There’s a message in your quickly evaporating checking account balance – you’re not a kid anymore! You’ve got to begin thinking about things like a mortgage, insurance, saving for college, retirement, etc. No longer can you afford to buy anything that you take a fancy to. Your responsibilities have to take priority over your wants.

Start Saving
It seems that few people these days actually save any of the money they earn. In fact, beginning in 2005 and continuing into 2006 the U.S. personal savings rate has actually been a negative amount. So collectively, we are spending more money than we earn. This is a very disturbing trend, because just 20 years ago people were saving more than 10% of their income. It’s never a good idea to spend every dollar that you make. Set a reasonable savings goal each month and stick to it, even if it’s only $100 per month. You can even set up automatic deposits from your paycheck.

In conclusion, you and your spouse have many decisions to make, which means plenty of opportunity to disagree with each other. How you’re going to handle your finances is one of those key decisions that you can’t afford to just avoid. The simple truth is that money issues are with us every day. If you aren’t in financial sync, your marriage could be in deep trouble. Harmony in financial matters can help lead to harmony in other aspects of the marriage.