Carrie Schwab Pomerantz Money-Smart Families

The focus of my two previous Yahoo! Finance columns has been on the practical skills your child will need when he or she leaves home, and why you should encourage your older children to begin the process of building long-term savings.

These are the kinds of things I've been trying to teach my own three children, and I believe they're vital for every kid. But there's another aspect of money that's less tangible but no less important: the virtue of values.

The Importance of Financial Values

Call me old-fashioned, but lessons like the work ethic, financial responsibility, delayed gratification, and charity are, to my mind, just as vital as knowing about balancing your checkbook, portfolio diversification, and the ins and outs of 401(k) plans.

In an affluent society that seems more determined than ever to get more -- more wealth, more possessions, and more of the status that seems to come with those commodities -- values and virtues are more important than ever. Teaching your kids the ABCs of money management is crucial, but sharing your good money values can help make your hard work stick.

I probably don't need to convince you that values are important. Instead, my goal is to help you see how financial values can be taught, and that -- whether you're conscious of it or not -- you're passing your own values to your children through your words, behavior, and actions.

The Example You Set

I'm a big believer in giving kids direct, hands-on experience with money. Give them an allowance. Teach them to save. When they're old enough, encourage them to work part-time. All these lessons will help your kids learn to use, accumulate, and earn money.

But remember this: They're also learning by example -- your example. They watch you spend money every single day. They hear how you talk about work and investing. The way you deal with personal finance may be the single biggest factor in shaping their attitudes toward money. This does not, of course, mean you have to change the way you spend, earn, save, or invest. But it does mean you need to be aware of the example you set.

And as a parent, you're the ideal teacher for all kinds of lessons about finances and the values associated with them. It starts with the little things, like encouraging them to save part of their allowance. But every day is filled with opportunities to impart practical and philosophical lessons about money and values.

Hands-on Lessons

Small children can help comparison shop in the supermarket, for example; they'll learn something useful and realize you're prudent with money. Older children can help when you pay the bills; again, they'll be learning something practical, and it'll be an opportunity to teach them about day-to-day financial responsibility. Sharing this can teach them the importance of paying off credit card bills monthly.

Tax time can be a chance to explore the financial realities of being a citizen in the community. When you make donations to the institutions you support, you can teach your children about the importance of charity and the idea of giving something back. But this shouldn't only be about monetary donations; invite them to participate in the next walk-a-thon or fundraiser, or to volunteer time for a favorite charity.

Perhaps you review your 401(k) statement or investment portfolio on a quarterly basis; that's another terrific teaching opportunity. Even watching television can be a source of knowledge and values: Kids are extremely susceptible to the desires and manipulations of advertising, and you can help them see through the hype and teach them that their happiness isn't dependent on the next big thing.

Family-Finance Dynamics

Kids like being part of the bigger family picture, but they'll also be learning a subtler lesson about financial values. They'll realize you take personal finance seriously, and that money is a resource to be used wisely and well.

You might even pick out certain financial challenges that highlight specific lessons, such as making tradeoffs ("If we ate out a few times less per month, we could take a better vacation this summer" or "I'm going to buy a used car instead of a new one and put the extra money into your 529 college saving plans"). This will teach them about the pleasures of delayed gratification.

In one sense, every financial transaction you make can be a lesson for your kids, at least the ones they witness or experience. If you're cavalier with money, they'll pick up on that; if you're prudent, they'll pick up on that, too.

Spheres of Influence

Of course, you're not the only point on their moral compass. Your kids also get messages about values from a host of other sources: their peers, relatives, and other adults as well as the pervasive and very powerful media. You'll never be the sole influence on your kids, especially as they enter the teenage years and their drive toward independence begins to accelerate.

Indeed, it would be foolish and counterproductive to try to shield them from values different from your own. A good part of growing up is learning how to make judgments about what's right. But of all the forces affecting your children's development, you're surely the most powerful one.

When my son was 16, one of his friends got a new BMW as a birthday present. But when he told me about it, he said, "You know, Mom, I would be embarrassed if you bought me a car like that. It's just not right." His sense that such an extravagance was "just not right" was, I believe, based on an idea my husband and I have tried hard to instill in all of our children: that you have to work for what you want.

Every parent, no matter how much money they have, has to make choices about what to give their children and what to make them work or save for, and I realize that different people will come down on different points on that spectrum. But just because you can afford something doesn't necessarily mean you should buy it.

Who You Want Them to Be

I'm certainly not suggesting that deprivation is a good thing, but teaching your children sense of accomplishment that accompanies working and saving for a substantial goal is clearly valuable -- and will serve them better in the long run.

I want my kids to plan for big purchases, to put their own resourcefulness, as savers and earners, to work. I'm more than willing to help them, but they have to show some initiative, put forth some effort, and demonstrate that they're willing to make short-term sacrifices for long-term goals. That, of course, is part of the essence of adult life and adult responsibility, and it's what I was taught as a young girl.

I believe the primary goal of parents is to foster independence, self-reliance, and confidence. Thinking about the values behind your financial decisions and articulating those values to your children will go a long way toward helping your kids mature into the kind of adults you want them to be.