We all want our children to grow up to be responsible, independent, secure adults. We teach them to say please and thank you and to take turns. We encourage them to do well in school and applaud all their accomplishments.

But there is one area where we seem to be falling short. Consider these statistics: 62% of high school seniors taking a basic economic literacy test in 2006 failed.(1) 23.5% of high school seniors stated that they seldom if ever saved money.(2) The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October, 2007.(3) And here's a sobering one: approximately 57% of all divorces are due to arguments over money.(4)

How can we increase the chance that our kids will not become a part of the above statistics? We teach them financial literacy. And the good news is, it's not that hard to do...we just need to start doing it.

Teaching kids financial literacy can begin as young as 3- or 4-years old. It won't be a formal education in financial literacy, but it's an important start. Begin by having the "money conversation". Explain to them (remember, this is informal) that most of the things we need or want we have to pay for. It's paid for with money that we earn by working. There's only a limited supply which means we can't have everything we want so we'll need to make good spending choices.

For some hands-on experiences, these youngsters can count coins and sort them into piles. Introduce them to the names and values but don't expect them to comprehend it all. You're building a financial literacy foundation, their "formal" money education begins in Kindergarten. As Kindergarteners they will begin to add money. At home you may want to start an allowance. An allowance is probably the most effective way to teach kids how to manage their money. And since young kids do not have jobs, they're going to need some seed money from you.

When you give your child an allowance you're going to have to relinquish some control. Not all control; you may want them to save a portion of their allowance for future goals or charity. But they need to be able to make purchasing decisions on their own. And the main reason is because they need to experience making a poor financial decision. Better now than when their mistakes are much more expensive. Consider it controlled failure. And when they do make a mistake, talk about it and help them figure out how to do things differently in the future.

When you shop...compare prices, use coupons, and look for sales. These teach your kids that you want to get the best value for your dollar. And if you must use credit cards, pay them off each month and be sure your kids know you do.

Show your kids how to set up short-term financial goals. This teaches planning ahead and living within your means, not to mention the added benefit of delayed gratification. When they get good at the short-term goals, begin to make them longer and increase the amount of the goal. One day they will want to buy their first home; these experiences can help teach them to save for a down payment.

Financially savvy kids value money. Saving money to buy something they want helps teach this. Compound interest is another. Although compound interest is a tougher one for young kids, it can be introduced visually by showing them what can happen to their money over time if they are earning interest. It's a fascinating phenomenon. And kids love the idea of getting free money. Tap into this by offering them interest on their balance each month which encourages them to save. You choose the interest rate, but anything you choose will most likely be more than what they would get at a bank.

When your kids enter junior high or high school, begin their education into different ways to invest their money. If you have a broker or financial planner, have your kids set up an appointment to discuss their options. And then have them invest their money. When their statements come in, teach them how to "read" them.

Kids need to know how to operate effectively in the adult world. If you begin having the money conversation with your child today, chances are they will be better prepared to lead financially healthy and productive lives.

One final statistic: Only 32% of parents talk to their children regularly about personal finance.(5) Are you one of them?

1 2006 Jumpstart Coalition survey results executive summary
2 2006 Jumpstart Coalition survey results executive summary
3 http://www.foxnews.com/story/0,2933,318132,00.html, December 24, 2007
4 http://www.remtech.biz/FactsAndStats.htm
5 http://www.remtech.biz/FactsAndStats.htm

Karyn Hodgens is co-founder of Kidnexions, maker of KidsSave, a software savings and money management program designed to help parents teach their kids healthy saving and spending habits.

To begin an allowance program for your child and help your child set and track goals visit http://www.kidnexions.com

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